South Korean stocks closed higher on December 26, driven by gains in major tech shares like Samsung Electronics and SK hynix. The won strengthened sharply to 1,440.3 against the dollar, up 9.5 won, following the National Pension Service's resumption of foreign exchange hedging and authorities' intervention. This marked a rebound from near 16-year lows.
On December 26, the Korea Composite Stock Price Index (KOSPI) rose 21.06 points, or 0.51 percent, to close at 4,129.68. Trading volume was robust at 502.7 million shares worth 16 trillion won ($11.1 billion), though losers outnumbered winners 639 to 246. Foreigners net bought 1.78 trillion won of shares, institutions added 388 billion won, while retail investors sold 2.2 trillion won.
The gains followed Wall Street's rally on December 24 (U.S. time), with the Dow Jones Industrial Average up 0.6 percent and the Nasdaq Composite rising 0.22 percent. The U.S. Volatility Index (VIX) fell to 13.4 points, its lowest this year, as unemployment benefit applications declined, boosting confidence in the U.S. economy.
"The KOSPI went up as the inflow of foreign capital increased amid eased concerns over an artificial intelligence bubble," said Lee Jae-won, an analyst at Shinhan Securities, noting that foreign buying focused on semiconductor shares. Samsung Electronics surged 5.31 percent to an all-time high of 117,000 won after reports of independently developing a graphic processing unit for smartphones. Rival SK hynix climbed 1.87 percent to 599,000 won.
SK Square rose 4.21 percent to 334,500 won following the lifting of an investment warning, while Mirae Asset Securities jumped nearly 21 percent on expectations of benefiting from SpaceX's anticipated IPO next year, having invested around 200 billion won in the U.S. firm. In contrast, LG Energy Solution fell 1.79 percent to 383,500 won, and Doosan Enerbility slid 3.5 percent to 73,600 won. Shipbuilding and IT shares weakened, with HD Hyundai Heavy down 1.35 percent to 512,000 won, Hanwha Ocean off 2.1 percent to 116,500 won, HD Korea Shipbuilding tumbling 3.12 percent to 403,000 won, Naver declining 2.11 percent to 231,500 won, and Kakao slipping 2.84 percent to 58,100 won.
The Korean won traded at 1,440.3 per dollar at 3:30 p.m., up 9.5 won from the prior close, reaching its strongest level since November 4. This rally followed the National Pension Service's resumption of strategic foreign exchange hedging to support the currency, which had lingered near 16-year lows. On December 24, foreign exchange authorities issued a verbal intervention, deeming the won's weakness "excessive" and vowing "strong" policy measures. The won had posted its largest daily gain in over three years that day, rising 33.8 won to 1,449.8, with markets closed on Christmas Day.
"The won is unlikely to see another sharp decline in the short term, and the latest measures are expected to help stabilize sentiment that had been excessively skewed toward the won's weakness," said Choi Ji-wook, an analyst at Korea Investment & Securities. "For further improvement in market sentiment, it is important in the near term whether the rate closes below 1,450 won toward the year-end." Bond prices ended lower, with the three-year Treasury yield up 1.9 basis points to 2.958 percent and the five-year note yield rising 2.9 basis points to 3.240 percent.
