South Korean stocks spiked over 5 percent Tuesday on the Federal Reserve's plan to purchase corporate bonds, which fueled optimism over a quicker-than-expected recovery in the global economy. The Korean won sharply rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) surged 107.23 points, or 5.28 percent, to close at 2,138.05. Trading volume was high at about 947 million shares worth some 13.4 trillion won ($11.1 billion), with gainers outnumbering losers 868 to 26.

Foreigners bought a net 90.4 billion won, ending a five-day selling streak, and institutions purchased a net 472.2 billion won. Individuals offloaded a net 574.4 billion won.

The secondary KOSDAQ also shot up 42.23 points, or 6.09 percent, to finished at 735.38. Foreigners snatched a net 425 billion won, the largest daily sum since the tech-laden index launched in 1996.

The KOSPI remained bullish the entire session, rebounding from the previous session's 4.76 percent fall amid fears of a second wave of the new coronavirus in the United States and China.

The market's rally came after the US Federal Reserve's decision to start purchasing a "broad and diversified portfolio" of corporate bonds.

The plan is part of the Fed's quantitative easing project to ensure companies can borrow through the bond market amid the COVID-19 fallout.
"Such a turnover in a single day suggests that the stock market is still maintaining its recovery momentum," said NH Investment & Securities analyst Noh Dong-kil.

The index's hike is likely to weaken after today's stellar surge, he added, citing that the Fed will not be able to roll out more stimulus tools as powerful as the latest bond-purchasing plan.

Most large caps traded higher.

Market bellwether Samsung Electronics rose 4.41 percent to 52,100 won, and No. 2 chipmaker SK hynix gained 4.15 percent to 85,400 won.

Top pharmaceutical firm Samsung BioLogics added 2.23 percent to 826,000 won. Leading chemical maker LG Chem surged 13.9 percent to 487,500 won following reports that it will export two kinds of COVID-19 diagnostic kits.

Internet giant Naver spiked 5.18 percent to 243,500 won, with game publisher NCsoft soaring 8.02 percent to 875,000 won.

Doosan Group and its affiliates spiked over the groups' plan to sell its key construction equipment maker unit Doosan Infracore.

Doosan Infracore skyrocketed by the daily permissible limit of 29.86 percent to 7,480 won. Doosan Heavy Industries jumped 10.4 percent to 5,150 won.

The local currency closed at 1,207.20 won per dollar, up 8.8 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 0.1 basis point to 0.860 percent, and the return on the benchmark five-year government bond dropped 2.2 basis points to 1.131 percent. (Yonhap)