South Korea‘s stock market hit a new all-time high Thursday as the Korea Exchange’s main board Kospi crossed the 2,800 mark on massive institutional buying of chip shares.

The Kospi rose 1.7 percent to 2,806.86 on Thursday, pushing its total market cap to reach 1,936.5 trillion won ($1.8 trillion). Kospi crossing the 2,800 mark came three weeks after it passed the previous threshold of 2,700 on Dec. 4, which was then a fresh high.

Institutions net purchased 628.2 billion won worth of stocks and foreigners net bought stocks worth 110.6 billion won. Retail investors net sold 746.9 billion won worth of stocks. KRX‘s development board, the Kosdaq, edged up 0.6 percent to close at 928.68.

Semiconductor chip maker stocks were the main drivers of the rally on Christmas Eve with market bellwether Samsung Electronics‘ shares jumping 5.3 percent.

Marking a new high of 77,800 won per share, the market cap of the world’s largest chipmaker came to 464.4 trillion won, or 23 percent of all Kospi constituents.

This reflects investor expectations for semiconductor sector upcycle and the increase of DRAM prices from the first quarter of 2021, analysts said.

“Rush orders from Huawei Technologies has accelerated the depletion of inventories,“ Choi Do-yeon, analyst at Shinhan Investment, wrote in a note. ”OPPO, Vivo, and Xiaomi are increasing chip orders for mobile devices. Server chip orders have begun to pick up on the decline in client inventory levels.”

Moreover, investors in Samsung Electronics stocks are betting on high dividend payout for the year-end, as 2020 marks the final year of the company‘s Enhanced Shareholder Return Program, aimed at boosting dividends to ensure the company delivers value for the long-term shareholders. Also, Samsung Group scions are facing a need to procure cash to pay 11.03 trillion won in inheritance taxes -- part of which can be sourced from dividends from Samsung affiliates -- following the ex-chairman Lee Kun-hee’s death in October.

Kang Hyun-jung, a quant analyst at Kyobo Securities, estimated Samsung Electronics‘ year-end dividend per share would stand at between 566 won and 740 won.

Meanwhile, Kospi-listed chipmaker maker SK hynix climbed up 1.7 percent, while foundry and system semiconductor maker DB HiTek soared 7.1 percent.

Among companies trading on Kosdaq, Dongjin Semichem, fine chemical firm for semiconductors, surged 2.9 percent, while semiconductor machinery maker Wonik IPS gained 1.2 percent.

On the other hand, LG Electronics retreated 6.3 percent a day after it hit the price ceiling on the announcement of a joint venture with auto part maker Magna International to develop electric vehicle component business.

Local currency remained strong against the greenback. The US dollar was trading at 1,103 won each during the Thursday session’s close, as the Korean won rose 0.4 percent against the dollar.

By Son Ji-hyoung (consnow@heraldcorp.com)