South Korean shares climbed more than 4% on Monday, lifted by a strong rally in U.S. semiconductor stocks in the previous session as concerns over AI investment eased.

After declining for two consecutive trading days, the Korea Composite Stock Price Index (KOSPI) closed up 208.90 points, or 4.10%, at 5,298.04.

On Friday, U.S. markets closed sharply higher, driven by a surge in shares of chipmakers such as Nvidia, on expectations that increased investment in AI data centers would benefit the companies.

"Sentiment was also supported by Nvidia CEO Jensen Huang's comments that investment in AI infrastructure is at a reasonable level," said Lee Kyoung-min, an analyst at Daishin Securities.

Among leading index components, chipmaker Samsung Electronics rose 4.92%, while peer SK Hynix gained 5.72%. Battery maker LG Energy Solution advanced 2.47%.

Hyundai Motor and its affiliate Kia Corp saw their shares increase by 2.25% and 1.25%, respectively. POSCO Holdings edged up 1.11%, and biopharmaceutical firm Samsung Biologics added 1.56%.

Of the 926 stocks traded, 717 closed higher while 174 declined.

Foreign investors were net buyers of South Korean stocks, purchasing a net 441.6 billion won (approximately $302.3 million).

In the Seoul onshore settlement market, the won strengthened to 1,460.6 per U.S. dollar, up 0.16% from the previous close of 1,463.0.

In the currency and bond markets, the March futures contract for three-year Korean Treasury bonds rose 0.02 points to 104.67.

The yield on the most liquid three-year government bond increased by 3.9 basis points to 3.267%, while the benchmark 10-year bond yield rose 2.8 basis points to 3.753%.