Chip rally, ETF debut propel KOSPI to record close above 8,200

KOSPI and the closing prices of single-stock leveraged ETFs linked to Samsung Electronics and SK hynix are displayed on an electronic board at Woori Bank's dealing room in Seoul, Wednesday. KOSPI closed at 8,228.70, up 181.19 points, or 2.25 percent, rewriting its record closing high as 16 newly listed ETF products fueled strong buying interest. Yonhap

KOSPI extended its rally Wednesday and climbed above the 8,200 level to set another high after breaching the 8,000-point mark for the first time a day earlier.

Investor sentiment was buoyed by a sharp rally in U.S. technology stocks and growing expectations surrounding the launch of single-stock leveraged exchange-traded funds (ETFs) tied to Samsung Electronics and SK hynix.

Samsung Electronics also received a boost after its wage agreement was approved in a labor union vote with 73.7 percent support. The deal eased concerns over short-term strike risks, reinforcing positive sentiment toward the tech giant's stock.

The benchmark index opened at 8,242.12, up 194.61 points, or 2.42 percent, from the previous session, and at one point surged 5 percent to 8,450.26, marking its first-ever move above the 8,400 threshold. It later pared some gains to close at 8,228.70, up 181.19 points, or 2.25 percent, rewriting its record closing high just a day after reaching the previous milestone.

The strong gains in early trading prompted the activation of a buy-side sidecar, temporarily suspending program buy orders.

Korean equities drew fresh momentum from a strong overnight rally in U.S. semiconductor stocks.

The S&P 500 and Nasdaq Composite climbed 0.61 percent and 1.19 percent to close at record highs of 7,519.12 and 26,656.18, respectively. The Dow Jones Industrial Average, meanwhile, slipped 0.23 percent.

Semiconductor shares outperformed, with the Philadelphia Semiconductor Index jumping 5.53 percent. Micron Technology led gains among chipmakers, soaring 19.3 percent after Swiss investment bank UBS sharply raised its price target on the memory chipmaker.

Korean semiconductor shares followed suit. Samsung Electronics rose 2.68 percent, while SK hynix climbed 9.31 percent.

Adding to the bullish sentiment was the debut of 16 ETFs linked to the two chipmakers.

Most of the products are designed to deliver twice the daily price movement of the underlying shares, while two adopt an inverse leveraged structure that generates returns opposite to the stocks' daily performance.

Data from the Korea Financial Investment Association showed that more than 130,000 investors had completed the mandatory education program as of Monday, highlighting strong demand for the ETFs ahead of their launch and raising expectations that the products could influence trading flows in the chipmakers.

The enthusiasm was immediately reflected in trading, with the newly listed ETFs surging between 5 to 20 percent on their debut day.

"The listing of single-stock leveraged ETFs could serve as a temporary catalyst for heightened market volatility," said Han Ji-young, an analyst at Kiwoom Securities.

Amid KOSPI's record-breaking rally, the domestic ETF market also crossed a historic milestone, with the combined market capitalization of listed ETFs surpassing 500 trillion won ($333 billion) for the first time.

Data from the Korea Exchange showed that the combined market capitalization of 1,132 domestically listed ETFs reached 506.1 trillion won as of 11 a.m.

The milestone came 24 years after ETFs were first introduced to Korea's stock market in October 2002.

Meanwhile, Kosdaq moved in the opposite direction. The secondary index opened 1.28 points, or 0.11 percent, higher at 1,173.80 but turned lower in early trading and stayed in negative territory, closing at 1,133.13, down 39.39 points, or 3.36 percent.

In the Seoul foreign exchange market, the won opened at 1,506.7 against the U.S. dollar, weakening by 2.4 won from the previous session and remaining above the significant 1,500 level. It later pared losses to finish onshore trading at 1,501.2 per dollar, strengthening by 3.1 won from the previous close.