South Korean stocks rebounded sharply Tuesday, as investors were buoyed by the US Federal Reserve’s overnight announcement of unlimited bond-buying and the government’s bold emergency financial aid package to tackle the economic slowdown due to novel coronavirus spread.

The benchmark Kospi soared 127.51 points, or 8.6 percent, from the previous session, to close at 1,609.97. The market began strong at 1,523.69 and continued to move upward through the day, marking the biggest increase rate since Oct. 30, 2008, with 11.95 percent.

Institutional investors scooped up 503.2 billion won ($403.2 million) in stocks. However, foreigners, who turned to net buyers until early afternoon, turned back to net sellers and dumped 83.4 billion won of their shares, along with retail investors with 461.1 billion won.

The Korea Exchange temporarily suspended trading at 10:05 a.m. for five minutes, following a sharp rise in Kospi 200 index futures -- as prices jumped 5.29 percent. Prior to the trading halt, the nation’s sole market operator activated another trading halt on the tech-heavy Kosdaq at 10:02 a.m., as Kosdaq 150 futures rose 6.15 percent from the previous session’s close.

The Kosdaq also closed higher at 480.4 -- up 36.64 points, or 8.26 percent. The index got off to a solid start at 457.21 and quickly extended gains throughout the day. Foreign and institutional investors net purchased 82.5 billion won and 102.9 billion won of stocks, respectively, pulling up the bourse.

The sharp upturn in the local stock market was fueled by optimism over massive support packages for firms and the financial market, as well as stimulus measures both in and out Korea.

The Fed pledged an aggressive quantitative easing program Monday (local time) noting that it will buy an unlimited amount of Treasurys and mortgage-backed securities to soothe financial markets.

Despite the Fed’s big move, major stock market indexes on Wall Street tumbled. The Dow Jones Industrial Average dropped 3.04 percent to close at 18,591.93 points after the Senate again failed to advance a nearly $2 trillion COVID-19 stimulus package, as Republicans and Democrats failed to reach an agreement. The S&P and Nasdaq also fell 2.93 percent and 0.27 percent, respectively, on the same day.

However, most large-cap stocks in the Seoul market rose across the board, as President Moon Jae-in announced plans to double the size of an economic rescue package to 100 trillion won from the initial 50 trillion won to boost local businesses to minimize economic fallout from the novel virus outbreak. Among the figure, 42 trillion won will be funneled into financial markets, with 20 trillion won in store to help stabilize the local bond market.

Market bellwether Samsung Electronics jumped 10.47 percent and No. 2 chipmaker SK hynix soared 13.4 percent. Leading steelmaker Posco gained 5.43 percent. Korea’s No. 1 carmaker Hyundai Motor and its smaller sister Kia Motors climbed 8.56 percent and 7.44 percent, respectively. Auto parts maker Hyundai Mobis also increased 8.24 percent.

“The Fed’s overnight announcement on unlimited easing led to the rise in the local market indexes. The local government’s expanded aid package further raised the indexes’ increase rate,” said Lee Kyung-min, an analyst at Daishin Securities.

The Korean won also climbed sharply against the US dollar. The local currency closed at 1,249.6 won against the greenback -- strengthening 16.9 won from the previous session’s close.

By Jie Ye-eun (yeeun@heraldcorp.com)