The benchmark KOSPI gained 182.92 points or 3.29 percent to close at 5,735.66, recovering most of the previous day's 3.73 percent drop. It opened 2.05 percent higher at 5,666.34 and climbed as much as 4.75 percent to 5,816.43 before giving back part of the gains.
Foreign investors bought a net 660 billion won (US$498 million) of shares, while retail investors sold about 1.13 trillion won. The surge triggered a buy-side sidecar at around 10:50 a.m., temporarily suspending program buy orders for five minutes after KOSPI 200 futures rose more than 5 percent.
Samsung Electronics jumped 5.67 percent to 223,500 won, while SK hynix gained 5.81 percent to 1,294,000 won. SK Square rose 5.13 percent and Samsung Biologics added 1.87 percent, while LG Energy Solution fell 0.60 percent and Hyundai Motor slipped 0.16 percent.
The rebound remained concentrated in large-cap stocks despite the sharp gain. Only 372 KOSPI-listed stocks advanced, compared with 488 decliners, highlighting the outsized contribution from semiconductor heavyweights.
Sentiment toward chip shares improved as concerns over returns on heavy artificial intelligence investment eased and strong semiconductor exports offered support to the sector. Semiconductor exports in the first 20 days of October surged 222.5 percent from a year earlier.
The tech-heavy KOSDAQ rose 10.79 points or 1.38 percent to close at 792.76.
The won strengthened for a fourth consecutive session ahead of the BOK meeting, closing up 2.9 won at 1,325.2 per dollar from 1,328.1 on Tuesday. The close marked its strongest level since October 2, 2024, when it finished at 1,319.3 per dollar.
The currency opened at 1,325.5 and strengthened as far as 1,322.8 in early trading. Strong semiconductor exports supported expectations of continued dollar selling by exporters, while the return of foreign equity buying eased some of the dollar demand seen during the recent stock selloff.
Most South Korean government bond yields also fell ahead of Thursday's rate decision. The three-year yield dropped 1.8 basis points to 3.822 percent, while the 10-year yield declined 1.6 basis points to 4.160 percent.
The five-year yield fell 2.5 basis points to 3.965 percent, while the 30-year yield dropped 1.3 basis points to 4.251 percent. The 20-year yield bucked the broader move, rising 1.8 basis points to 4.197 percent.
The BOK is widely expected to keep the base rate unchanged at 3.00 percent on Thursday after consecutive quarter-point increases in July and August.
An AJP poll of seven economists found unanimous expectations for a hold, while five of six respondents who specified the timing of the next move expected another quarter-point increase in November.
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