Seoul shares finished higher on Friday, lifted by expectations of large-scale shareholder return programs from South Korea's two leading chipmakers, Samsung Electronics and SK hynix. The Korean won rose against the US dollar.

The benchmark Korea Composite Stock Price Index advanced 60.37 points, or 0.88 percent, to close at 6,912.95, after climbing as high as 6,954.12 during the session. Samsung Electronics and SK hynix are the index's two largest constituents by market value, so their share-price moves carry outsized weight in the benchmark.

Trading volume was moderate, with 404.5 million shares changing hands worth 28.7 trillion won ($20.7 billion). Declining issues far outnumbered advancers, 681 to 193.

Retail and foreign investors were net sellers, offloading a combined 1.34 trillion won, while institutional investors snapped up 248.2 billion won.

"Local stocks were boosted by shareholder return plans by SK hynix and Samsung Electronics, which overshadowed external uncertainties," said Lee Kyoung-min, an analyst at Daishin Securities.

SK hynix announced Wednesday a plan to repurchase some 40 trillion won worth of common shares as part of a shareholder return program. Samsung Electronics, the country's largest company by market value, was expected to announce a shareholder return scheme worth up to 110 trillion won later in the day, with investors watching whether the final details match the anticipated scale. The programs land amid Seoul's Corporate Value-up Program, a government initiative launched in 2024 that pushes listed companies to expand dividends and buybacks in a bid to narrow the long-standing "Korea discount" in local share valuations. Semiconductors are South Korea's largest export item, and the two firms together dominate the global memory chip market, including the high-bandwidth memory used in artificial intelligence data centers, making their capital-allocation plans a focus well beyond the local index.

The market's further advance was limited, however, by external uncertainties. The US Treasury Department's surprise bond buyback failed to quell lingering concerns about inflation and government debt, pushing bond yields upward. The Treasury only resumed regular buyback operations in 2024, its first such sustained program since 2002, as a liquidity-management tool. US yields are watched closely in Seoul because they influence global borrowing costs and the relative appeal of equities in emerging markets.

Large-cap shares closed mixed. Market bellwether Samsung Electronics climbed 3.87 percent to 281,500 won, while industry rival SK hynix added 2.31 percent to 1,730,000 won.

Financial shares gathered ground as investors went bargain hunting. Industry leader KB Financial gained 2.69 percent to 164,300 won, and Shinhan Financial Holdings rose 2.97 percent to 104,100 won.

Defense and shipbuilding stocks were among the decliners, weighed down by profit-taking. Both sectors had enjoyed strong runs on export demand, with Korean shipyards holding some of the world's largest order backlogs and defense exporters benefiting from rising global military spending. Defense giant Hanwha Aerospace fell 7.03 percent to 1,085,000 won, and shipbuilder HD Hyundai Heavy Industries shed 4.73 percent to 453,000 won.

Shares of Kakao also dropped sharply, losing 7.49 percent to 35,800 won, following the company's announcement that it would spin off its chat-app based platform business. Kakao Talk is South Korea's dominant messenger app, and the platform business has faced growing regulatory scrutiny at home over its market dominance.

The Korean won was quoted at 1,386.5 against the US dollar as of 3:30 p.m., up 6.1 won from the previous session. (Yonhap)