SEOUL  South Korean shares hit their highest level on Thursday in more than 29 months, as chipmaker Samsung Electronics jumped ahead of its second-quarter earnings, while auto and financial stocks firmed on policy measures to encourage higher dividend payouts.

The benchmark KOSPI closed 30.93 points, or 1.11% higher at 2,824.94, its highest level since Jan 21, 2022.

Samsung Electronics rose 3.42%, a day ahead of its preliminary earnings announcement for the second quarter. The chipmaker is expected to post a 13-fold increase in profit, on rising demand for artificial intelligence technology.

SK Hynix, which supplies high-end chips to Nvidia, fell 2.54%, despite the US chipmaker's 4.6% jump overnight.

There was a local media report that Samsung's high-end chips passed Nvidia's test for use, but Samsung said the report was inaccurate.

"If Samsung gets to supply high bandwidth memory chips to Nvidia, that will bring down SK Hynix from its status of exclusive supplier," said Park Kwang-nam, an analyst at Mirae Asset Securities.

Among sub-indexes, the finance-major index gained 1.80%, the securities-minor index climbed 3.21% and the insurance index jumped 2.21%, while the transport equipment index rose 1.20%.

Auto and financial stocks have been cited as those which have the potential to pay more dividends to shareholders, which the government seeks to boost with tax exemptions.

South Korea should try to address the country's high cost of living through structural reforms, instead of relying on the central bank to fight it, a Bank of Korea official said.

Foreigners were net buyers of shares worth 321.6 billion won (US$232.90 million).

The won was quoted at 1,380.4 per dollar on the onshore settlement platform, 0.39% higher than its previous close at 1,385.8.

The most liquid three-year Korean treasury bond yield fell by 3.8 basis points (bps) to 3.125%, while the benchmark 10-year yield fell by 4.9 bps to 3.230%.

  - Reuters