South Korean shares climbed nearly one percent to end at a 20-month high on Monday, with active foreign buying driving market leader Samsung Electronics Co Ltd to an all-time high.
"Accumulated money in US funds during last week's local holiday flooded into Korean markets, particularly targeting Samsung Electronics and telecom shares," said Jo Jae-hoon, an analyst at Daewoo Securities.
The benchmark Korea Composite Stock Price Index (KOSPI) finished up 0.89 percent at 869.04 points, the highest since May 18, 2002, when it ended at 875.03 points. The index hit a session high of 871.94 points in early afternoon trade.
South Korean stock markets had been closed for three days from Wednesday last week for the Lunar New Year holiday.
Shares of Samsung Electronics, the world's top memory chip maker, jumped 3.61 percent to end at 545,000 won, coming off a session high of 555,000 won.
Foreign investors, which were net buyers for a fifth consecutive session as of Monday, bought a net 536 billion won worth of shares.
Local institutions sold a net 529 billion won in shares. Retail investors bought a net 82 billion won in shares.
Gains in telecom shares also boosted the index. South Korea's biggest wireless carrier, SK Telecom Co, rose 3.02 percent to 222,000 won. The stock was seen undervalued compared with other IT shares.
Banking shares, such as top lender Kookmin Bank, came under pressure from local funds' program sales. Kookmin Bank ended the day 1.83 percent lower at 48,400 won.
"Demand for banking shares weakened as investors focus is now on IT shares amid Samsung Electronics shares moving to their record high," said Jo at Daewoo Securities.
Growing fears over the spread of bird flu in Asia, as well as South Korea, triggered buying of shares in fishery firms on expectations consumers would opt for seafood as a substitute for poultry.
Shares of many major fisheries that shot up by the daily limit of 15 percent included Daerim Fishery, Dongwon Fisheries Co and Oyang Fisheries. Daerim closed at 7,370 won, Dongwon at 5,680 won and Oyang ended at 6,160 won.
Meanwhile, shares of South Korea's largest processed chicken company, Maniker, slipped 3.1 percent to 5,310 won.
Officials said on Monday they were testing a fresh suspected case of the bird flu at one chicken farm in central South Korea, after having slaughtered almost 2.5 million poultry since the start of the outbreak was first reported on December 10.
In spite of lingering concerns over a massive capital write-down at cash-strapped LG Card Co, speculative trading by retail investors pushed the stock up 6.86 percent to 545 won, reversing a 15 percent drop early on.
LG Card shares accounted for 35 percent of the market's total trading volume, which stood at 488.7 million shares, up from 364.5 million on last Tuesday. Turnover was 3.38 trillion won, compared with 2.4 trillion won. Losers topped gainers 446 to 302 with 62 stocks unchanged.
The March KOSPI 200 futures index gained 1.15 points to 113.75 and the underlying KOSPI 200 spot index rose 0.93 percent to 113.68.
The junior Kosdaq ended up 0.57 percent at 448.25. The Kosdaq index is now quoted on a revised base of 1,000 points instead of the previous practice of basing the index at 100.