Asian stock markets opened sharply higher on Tuesday, with significant gains in both Japan and South Korea.

The South Korean KOSPI index surged by more than 3.5% in early trading, reaching a level above 7,045 points.

Leading the charge were major semiconductor companies, with shares of SK Hynix Inc rising over 5% and Samsung Electronics Co Ltd gaining more than 3%.

The positive momentum follows a report showing South Korea's economy grew faster than anticipated in the second quarter, supported by the ongoing boom in artificial intelligence and related chip industries.

According to data released on Thursday, the nation's gross domestic product expanded by 0.6% quarter-on-quarter, surpassing economists' median forecast of 0.4%.

While this represents a slowdown from the robust 1.8% growth seen in the first quarter, the latest figures continue a trend of stronger-than-expected economic performance.

This strength has prompted multiple upward revisions to the country's growth outlook by the government, the central bank, and international bodies like the International Monetary Fund.

The solid economic data also provides grounds for monetary policymakers to consider further interest rate hikes in the coming months.

Meanwhile, Japan's Nikkei 225 index also climbed, at one point rising more than 1% to trade above 66,585 points.

Analysis from Deutsche Bank suggests Japan's future policy focus may shift from supporting the yen to controlling government bond yields.

This strategic pivot aims to reduce financing costs and ensure the sustainability of public finances.

Late last month, Japanese Prime Minister Fumio Kishida unveiled a comprehensive economic growth plan valued at approximately 2.3 trillion US dollars.

Deutsche Bank strategist Mallika Sachdeva noted in a recent report that this plan signifies Japan is at a critical juncture for significant transformation in its fiscal and industrial policies.

The government faces the dual challenge of expanding fiscal expenditure while maintaining long-term fiscal sustainability.

The growth strategy outlines intentions to fund this substantial spending by mobilizing domestic savings and encouraging large institutional investors to increase their allocations to domestic assets.

A key requirement for maintaining debt sustainability is ensuring that the nominal economic growth rate consistently outpaces the cost of financing.

Sachdeva believes achieving these dual objectives may necessitate government measures to suppress government bond yields and manage overall funding costs.