Seoul shares rose to the psychologically significant 1,800-point level, hitting a 27-month closing high on Friday as stronger-than-expected US economic data lifted key exporters such as Samsung Electronics Co Ltd. The Korea Composite Stock Price Index (KOSPI) ended up 1.02 percent at 1,802.58 points, the highest close since early June 2008.
"Market sentiment has improved significantly thanks to the latest improvement in US markets and the economic backdrop," said Lee Jin-woo, a market analyst at Mirae Asset Securities. New US claims for unemployment benefits fell more than expected last week to a two-month low, while the trade deficit narrowed sharply in July, hopeful signs for the stuttering economic recovery. "The market is now being led by foreign investors as appetite for riskier assets has strengthened, prompting buying in technology and autos," Lee added.
Foreign investors were buyers of a net 544.9 billion won worth of stocks, and institutions purchased a net 57.9 billion won. Gains were led by large-cap exporters as investors grew more optimistic about the economy. Shares in Samsung Electronics, the world's No 1 memory chip maker and the largest shares on the main KOSPI, rose 1.3 percent. Shares in Hynix Semiconductor, the world's second-biggest, gained 1.7 percent.
Brokerages gained as investor sentiment towards the sector was boosted by the market's broader rally. Shares in Samsung Securities rose 3.6 percent and Woori Investment & Securities climbed 5.6 percent. Retail stocks continued rallying on the back of expectations for strong Chuseok holiday sales, analysts said. Shares in Lotte Shopping, South Korea's biggest retailer that operates department and discount store chains, rose 2.1 percent.
Hyundai Department Store advanced 2.6 percent. Banking stocks bounced following recent weakness. Shares in Shinhan Financial Group, whose stocks have struggled in recent sessions amid scandal involving the group chairman, went up 3.1 percent. Woori Finance Holdings rose 2.7 percent.
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