KOSPI closes nears 7,300 as SK hynix ADR surge boosts investor sentiment

KOSPI and the share prices of SK hynix and Samsung Electronics are displayed in the dealing room of Hana Bank in Seoul, Wednesday. The benchmark index closed at 7,284.41, up 6.24 percent from the previous session. SK hynix and Samsung Electronics rose 8.83 percent and 6.27 percent, respectively, to close at 2,082,000 won ($1,398) and 279,500 won. Newsis

Korean stocks soared Wednesday, with KOSPI closing near 7,300 and Kosdaq reclaiming 800, as sentiment toward chipmakers rebounded and softer-than-expected U.S. inflation data boosted risk appetite.

The benchmark KOSPI closed at 7,284.41, up 6.24 percent from the previous session. The index opened 3.3 percent higher at 7,082.91, before extending its advance to more than 6 percent and triggering a buy-side sidecar.

Most sectors gained, supported by net buying from foreign investors. Foreign and institutional investors purchased a net 2.34 trillion won and 183.1 billion won of shares, respectively, while retail investors sold a net 2.46 trillion won.

U.S. semiconductor stocks advanced overnight as bargain hunters stepped in following a recent sell-off. Sentiment toward Korean chipmakers received an additional boost after Barclays said the price of SK hynix's American depositary receipts (ADRs) could double, sending the securities up 27 percent.

SK hynix rose 8.83 percent to 2,082,000 won, while Samsung Electronics gained 6.27 percent to 279,500 won. SK Square jumped 16.13 percent and Samsung Electro-Mechanics advanced 12.14 percent.

Defense shares also rallied on bargain hunting. Hanwha Aerospace climbed 6.54 percent, while LIG Defense & Aerospace surged 13.83 percent.

Macro conditions provided further support. Headline and core U.S. inflation rose 3.5 percent and 2.6 percent from a year earlier in June, respectively, with both readings coming in below market forecasts. It eased concerns about monetary tightening and fueled a rebound in risk appetite.

Tensions in the Middle East remained elevated, though markets appeared to take the latest developments in stride. The U.S. began a naval blockade of Iran Wednesday morning, deploying warships and military aircraft and pushing international oil prices about 1.5 percent higher.

"The concerns over semiconductor demand did not disappear overnight, nor did worries about AI (artificial intelligence) capital expenditure," said Lee Eun-taek, an analyst at KB Securities. "Still, SK hynix's ADRs surged because the stock had been oversold. The broader market had already entered oversold territory. If concerns over AI investment ease during the upcoming earnings season, the stock market could enter another leg of its rally."

The secondary Kosdaq surged 5.8 percent to 829.43 after posting its lowest close of the year on Tuesday. The index opened 2.77 percent higher at 805.71 and extended its gains during the session, also triggering a buy-side sidecar.

The won strengthened, with the won-dollar rate closing at 1484.7 won, down 8.3 won from the previous session.