South Korean shares reached a new record high on Wednesday, driven by investor optimism over another possible US Federal Reserve rate cut despite increasing US-China tensions.

The Korea Composite Stock Price Index or Kospi rose 95.47 points, or 2.7%, to end at 3,657.28. The Kosdaq increased by 16.76 points, or 2%, to close at 864.72.

US Trade Representative Jamieson Greer told CNBC on Tuesday that whether or not President Donald Trump would slap China with 100% tariffs from Nov. 1 or sooner will depend on Beijing's decision in a dispute over rare earths.

Greer's statement came after China unveiled broad new curbs on rare earth exports, potentially threatening key US sectors such as defense, technology, semiconductors, and automobiles.

In economic news, foreign direct investment declarations in South Korea declined 18% to $20.65 billion in the third quarter of 2025, while actual FDI inflows fell 2% to $11.29 billion, the Ministry of Trade, Industry and Energy said Wednesday.

FDI declarations declined due to a base effect from last year's record Q3, though the total slightly surpassed the five-year average, ranking fourth-highest in the record. US investments jumped 58.9%, while inflows declined from the European Union, Japan, and China.

In corporate news, Daehan Shipbuilding (KRX:439260) secured an order worth 329.8 billion won to build two container ships. The contract, valid till June 30, 2028, is from an undisclosed shipowner based in the Panama region. The deal represents 30.67% of the shipbuilder's total sales for 2024.

Shares of Daehan Shipbuilding rose more than 2% at market close.

In other news, CS Wind (KRX:112610) signed a contract to supply wind turbine structures to Vestas American Wind Technology. The order, valued at 37.4 billion won, is valid till May 15, 2026.

Shares of CS Wind rose nearly 3% at market close.