"Expectations on the outcome of the Fed's meeting are pushing the index higher. North Korea's rocket launch failed to rattle the markets," said Kim Soon-young, an analyst at IBK Securities. Kim said gains were capped by profit-taking on bluechips. The US Federal Reserve began its two-day meeting on Tuesday and is expected to announce a new round of Treasury securities purchases on Wednesday, according to a Reuters poll.
North Korea launched its second rocket this year on Wednesday in defiance of the United Nations. However, there was little impact on South Korean markets. Rating agency Standard & Poor's said that the South's credit-worthiness remains unchanged, citing the country's strong macroeconomic metrics as balancing its geopolitical risks. Flat-screen maker LG Display extended losses, falling 4.9 percent. Market watchers said a sell-off may have been prompted by a media report projecting poor earnings early next year, although they believed the opposite was true.
Other large caps such as LG Electronics and Kia Motors also fell by about 2 percent, reversing recent gains. Shipper STX Pan Ocean was one of the biggest gainers, with shares jumping nearly 15 percent after parent company STX Corp said it may sell its controlling stake to raise cash.
"STX Pan Ocean's performance has taken a beating, but the company is seen better off being sold than as an affiliate of the financially troubled STX Group in terms of financial support or credit rating," said Park Sung-bong, a shipping sector analyst at Hana Daetoo Securities. Foreign investors bought for a tenth straight session, buying a net 209 billion won worth of KOSPI shares, insulating the main board from selling by retail investors. The KOSPI 200 benchmark of core stocks closed up 0.6 percent, while the junior KOSDAQ edged 0.8 percent higher.