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

Seoul shares closed higher Friday to end their three days of decline as investors' concerns over a bubble in the artificial intelligence sector were eased following robust earnings from Broadcom on Wall Street overnight. The local currency fell against the US dollar.

The benchmark Korea Composite Stock Price Index gained 56.54 points, or 1.38 percent, to close at 4,167.16.

Trade volume was moderate at 421 million shares worth 16.3 trillion won ($11 billion), with gainers outpacing losers 655 to 221.

Foreigners bought a net 41.3 billion won worth of local shares, and individuals sold a net 1.46 trillion won. Institutions purchased a net 1.41 trillion won.

While investors have voiced concerns over a potential bubble in the AI sector following this year's rally in major technology stocks, Broadcom's expectation-beating earnings released after the closing bell on Wall Street overnight helped ease such concerns.

"The strategy of expanding exposure to AI-related stocks will remain valid," Han Ji-young, a researcher at Kiwoom Securities, said.

Analysts said the Korea Exchange's issuance of a warning advisory on SK hynix Inc., the second-largest company by market capitalization on the main bourse, is unlikely to have a significant impact on the overall direction of chipmakers.

"The current conditions in the semiconductor industry, its upward cycle and the earnings consensus remain intact," Han said.

The KRX issued the advisory after the chipmaker posted sharp gains this year on the back of strong memory chip sales amid the AI boom. Investors are barred from buying stocks placed under the advisory through margin trading.

Shares of SK hynix increased 1.06 percent to 571,000 won.

Samsung Electronics rose 1.49 percent to 108,900 won, while LG Energy Solution shed 0.11 percent to 445,500 won.

Samsung Fire & Marine Insurance crashed 22.3 percent to 489,500 won, following the previous day's abrupt 28.31 percent gain without clear reason.

Top carmaker Hyundai Motor added 2.03 percent to 301,500 won, and Kia gained 2.36 percent to 125,800 won. Hanwha Aerospace rose 6.31 percent to 961,000 won.

The local currency was quoted at 1,473 won against the greenback at 3:30 p.m., down 0.7 won from the previous session. (Yonhap)