An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)
An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)

South Korean stocks closed more than 1 percent higher Tuesday to set a new record high for the fifth consecutive session thanks to a rally in chip shares and foreign buying. The Korean won sharply rose against the US dollar.

The benchmark Korea Composite Stock Price Index added 42.31 points, or 1.24 percent, to end at a fresh all-time high of 3,449.62.

This marked the fifth consecutive session the Kospi reached a new all-time high and the 11th straight session of increase.

Trade volume was high at 398.4 million shares worth 13.8 trillion won ($10 billion), with losers outnumbering winners 568 to 297.

Foreigners purchased more than 1.7 trillion won worth of local shares and institutions bought 78.8 billion won, while retail investors dumped 1.76 trillion won for profit taking.

"The Kospi soared on the back of massive purchase by foreign investors and the strong performance of chip shares," Lee Kyoung-min, an analyst at Daishin Securities, said.

Blue chip tech shares gained ground on US rate cuts hopes and expectations for the South Korean government's policy road map aimed at fostering advanced industries, Lee explained.

Overnight, Wall Street gathered ground amid hopes the US Federal Reserve will cut its key rates this week. The Dow Jones Industrial Average was up 0.11 percent, with the tech-heavy Nasdaq composite rising 0.94 percent and the S&P 500 adding 0.47 percent.

In particular, electric vehicle giant Tesla jumped 3.56 percent, and Alphabet, the parent company of Google, soared 4.3 percent.

In Seoul, chip shares continued their rally, with Samsung Electronics jumping 3.79 percent to a new yearly high of 79,400 won and SK hynix soaring 5.14 percent to set a new record high of 348,000 won.

Defense shares were bullish, with industry leader Hanwha Aerospace surging 5.58 percent to 1.04 million won, Hyundai Rotem rising 3.72 percent to 223,000 won and LIG Nex1 shooting up 9.49 percent to 542,000 won.

Power plant manufacturer Doosan Enerbility skyrocketed 7.65 percent to 63,300 won, and SK Square, an investment firm for the semiconductor and IT sectors, advanced 2.74 percent to 206,000 won.

Shipbuilders also gained ground, with HD Hyundai Heavy up 0.9 percent to 503,000 won, Hanwha Ocean rising 1.19 percent to 110,800 won and HD Korea Shipbuilding gaining 1.09 percent to 416,000 won.

But leading battery maker LG Energy Solution went down 1.69 percent to 349,500 won, and Kakao, the operator of the country's top mobile messenger, dipped 1.72 percent to 62,900 won.

The local currency was trading at 1,378.9 won against the greenback at 3:30 p.m., up 10.1 won from the previous session. (Yonhap)