KOSPI closes higher as chip stocks offset US Treasury yield rise

KOSPI edged higher Friday as gains in chipmakers, fueled by expectations for stronger shareholder returns, offset concerns over rising U.S. Treasury yields.

The benchmark index closed at 6,912.95, up 0.88 percent, or 60.37 points, from the previous session. The index opened 1.35 percent lower but reversed course to close higher as semiconductor stocks led the rebound.

Foreign investors and retail investors sold a net 170.7 billion won ($123 million) and 1.17 trillion won, respectively, while institutional investors bought a net 248.7 billion won.

SK hynix rose 2.31 percent to 1.73 million won, while Samsung Electronics climbed 3.87 percent to 281,500 won, as expectations for stronger shareholder returns boosted demand for the chipmakers.

SK hynix announced a 40 trillion won share buyback and cancellation program on Wednesday. The company also strengthened its shareholder return policy, pledging to return at least 50 percent of cumulative free cash flow to shareholders.

Samsung Electronics is also reportedly planning to approve a shareholder return program worth more than 100 trillion won, although details have yet to be finalized.

The gains came despite renewed pressure from rising U.S. Treasury yields.

U.S. Treasury yields resumed their upward trend Thursday (local time), reversing much of the previous day's decline after the U.S. Treasury announced an expanded bond buyback plan. Investors remained concerned about inflation and the U.S. government's growing debt burden.

"A large-scale share buyback and cancellation announced by SK hynix, along with growing expectations for stronger shareholder returns from Samsung Electronics, provided upward momentum for chip stocks and the broader local market," said Lee Kyoung-min, an analyst at Daishin Securities.

Lee, however, pointed to lingering external uncertainties, with long-term U.S. Treasury yields rising again and U.S. President Donald Trump signaling additional economic sanctions against Iran.

Meanwhile, the secondary bourse Kosdaq plunged 4.63 percent, or 38.95 points, to close at 801.94.

Strong selling pressure hit the market from the opening bell, triggering a sell-side sidecar at 10:05 a.m., according to the Korea Exchange.

In the foreign exchange market, the won strengthened, with the won-dollar exchange rate falling 6.1 won to 1,386.5 won from the previous session's close. The currency fell below the 1,400-won-per-dollar level on Wednesday for the first time in nearly 11 months.