The KOSPI traded at 6,484.59, up 2.2 percent from Tuesday's close of 6,345.53, while the junior KOSDAQ reversed course and fell 1.5 percent to 845.18.
The rally was narrow. Decliners outnumbered advancers 473 to 357 on the main board, while the large-cap KOSPI 200 rose 2.5 percent, outperforming the broader index and underscoring how buying was concentrated among heavyweight stocks.
Samsung Electronics and SK hynix have yet to announce new shareholder-return policies, but expectations intensified after KB Securities said in a report Monday that Samsung could raise annual shareholder returns to between 100 trillion and 200 trillion won ($70.7 billion-$141.4 billion). The brokerage maintained its target price at 600,000 won.
Samsung currently returns about 9.8 trillion won a year in dividends under a shareholder-return program that runs through this year, with total returns set at 50 percent of free cash flow.
Samsung Electronics surged 4.1 percent to 249,250 won, while SK hynix gained a more modest 2.1 percent to 1,455,000 won, widening the gap between the two chip bellwethers on the same market catalyst.
Samsung Electro-Mechanics climbed 3.8 percent to 1,310,000 won.
The electronics sector jumped 6.7 percent, the strongest-performing group on the board, with LG Electronics up 6.9 percent.
Life insurers also rallied, with the sector gaining 4.8 percent.
Expectations for higher payouts have taken on greater market significance since an amendment to the Restriction of Special Taxation Act took effect Jan. 1.
Under the revised rules, dividends from qualifying high-payout companies are taxed separately at rates of 14 percent to 30 percent rather than being added to comprehensive income subject to rates as high as 45 percent, giving investors a stronger incentive to rotate into companies and sectors expected to increase distributions.
Foreign investors were net buyers of 109.9 billion won of KOSPI shares in early trade, while individuals sold a net 73.8 billion won and institutions sold 29.9 billion won.
The Nikkei 225 in Tokyo was little changed at 66,950.51, down 0.03 percent.
The won was quoted at 1,414.20 per dollar on the Hana Bank screen, marginally weaker than Tuesday.
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