Seoul shares hit a three-month closing high on Wednesday led by technology issues such as Samsung Elec, up on hopes of firmer memory chip pricing, while POSCO rose on a potential output cut. The Korea Composite Stock Price Index finished up 2.84 percent at 1,228.17 points, the highest close since October 15 last year, and advancing for a fifth consecutive session, the longest gaining streak since March, 2008.
Foreign investors were net buyers for a sixth straight session picking up a net 562.7 billion won, the biggest foreign buying since October, 2007 and extending their longest buying streak since April, 2007.
With expectations that foreign exchange rates would stabilise after the first quarter, investors are investing more liberally, according to Han Jeong-tae, Hana Daetoo Securities analyst. "In dollar terms, South Korean stocks may look cheap."
Technology issues advanced after their US peers gained as investors bet tech firms would benefit from President-elect Barack Obama's proposed economic plan, which would include the largest US infrastructure investment since the 1950s. Samsung Electronics climbed 5.22 percent on expectations for stronger chip prices as Taiwan's top makers said they may hike prices, boosting hopes the market's worst-ever downturn may have bottomed.
Spot prices of dynamic random access memory (DRAM) chips, used mainly in personal computers, have been rebounding from an unprecedented slump as cash-strapped manufacturers cut back output amid sinking demand. A firm 5 percent rise seen in the US semiconductor index also lifted Samsung's smaller rival Hynix Semiconductor by 1.22 percent.
Banking issues also rallied. Hana Financial Group, which had fallen 61 percent on 2008, was up 8.19 percent. Woori Finance Holdings, which had lost 66 percent in 2008, rose 15 percent.
Meanwhile POSCO advanced 5.91 percent after the world's No 4 steelmaker said on Tuesday it might cut steel production further in the current quarter to cope with slumping demand from automakers and home appliance firms. Doosan Corp surged 12.14 percent after it said on Tuesday, retail giant Lotte Group would acquire its spirits-making division for 503 billion won.