South Korean shares edged up on Monday to their highest close since mid-May, led by exporters such as Hyundai Motor after stronger-than-expected US jobs data raised hopes the world's largest economy would avoid a hard landing.
South Korean shares have rebounded steadily since falling sharply in May and June, as exporters have paced gainers. The benchmark KOSPI has cut its loss for the year to 1.5 percent, after being down this year as much as 13.6 percent on June 14.
But in the short term, any advances may be limited by worries that recent gains were too fast after the KOSPI's relative strength index reached 72.8 on Monday. Any reading above 70 indicates overbought conditions.
"I don't think we'll have a big correction, but there should be one either this week or next," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management.
However, Lim added he expected gains to be supported in September amid positive factors such as expectations for improved semiconductor earnings and the outlook for the US economy. "People are stepping in due the higher possibility of a soft landing in the United States," he said.
The benchmark Korea Composite Stock Price Index (KOSPI) pared earlier stronger gains to end up 0.18 percent at 1,359.06, marking its highest close since May 19. Foreign investors ended net buyers for the first session in four, having purchased a net 98.1 billion won ($102.4 million) in the main bourse, according to data at 0635 GMT.
US stocks ended at their highest in several months on Friday, ahead of the long weekend, on data showing US employers added a slightly higher-than-expected number of workers to their payrolls in August. The data also showed wage inflation slowing down, providing evidence of a cooler, but still solid, pace of economic growth that could allow the Federal Reserve hold interest rates steady.
Other US economic data kept the mood upbeat, including a report from the University of Michigan showing consumer sentiment held up better than expected in August, and easing inflationary pressures spotted in the Institute for Supply Management's US factory activity.
Exporters led gainers, with Samsung Electronics Co Ltd, the world's biggest maker of memory chips, gaining 0.46 percent to 656,000 won. Global sales of microchips in July rose 11.5 percent from a year earlier due to broad-based demand, a US industry group said on Friday. Hyundai Motor Co rose 0.97 percent to 83,000 won. The country's biggest auto maker said on Friday sales in August rose 24.6 percent from a year earlier, with US vehicle sales up 2.1 percent.
Gains in the broader market were also helped after oil prices held steady after falling below $70 a barrel on Friday as dealers expected several weeks of inaction on Iran's nuclear dispute with the West.
US crude futures were trading at $69.25 early in Asia. Airline shares rose, with Korean Air Co, the country's biggest carrier, rising 2.79 percent to 31,350 won. But broader gains were marred after investors locked in gains in some recent outperformers. Daewoo Shipbuilding and Marine Engineering Co ended down 0.5 percent at 29,850 won after earlier rising as much as 4 percent. Shares in the shipbuilder have risen 5.1 percent over the previous four sessions after it reported winning orders worth a combined $1.8 billion.
Trade volume reached 231.1 million shares worth 2.5 trillion won compared to 215.9 million shares worth 2.6 trillion won on Friday. Gainers edged out decliners by 391 to 353 with 79 titles ending flat. Retail investors sold a net 48.3 billion won, while institutional investors sold a net 17.9 billion won.
The September KOSPI 200 futures index gained 0.20 point to 176.60, while the underlying KOSPI 200 spot index edged up 0.33 point to 176.32. South Korea's junior and tech heavy Kosdaq market rose 1.56 percent to finish at 586.77, its highest close since July 3, powered by gains in Internet stocks.