The South Korean benchmark Kospi steadied after retreating sharply in early trading Monday, as concerns over rising US interest rates were offset by share buybacks by chip giants Samsung Electronics and SK hynix.

The Kospi closed at 6,820.02, up 0.46 percent from the previous session, according to the Korea Exchange. The index fell over 3 percent to 6,547.76 shortly after the opening bell, but pared its losses and eventually turned higher as heavy corporate buying helped lift the market.

Foreign investors and institutions were net sellers on the main board, offloading more than 633 billion won ($462 million) and 795 billion won worth of shares, respectively. Retail investors also sold a net 149 billion won.

In contrast, other corporations were net buyers, purchasing 1.57 trillion won in shares. The buying is believed to have been driven by purchases of Samsung Electronics and SK hynix shares for their respective buyback programs.

The early sell-off came after US Federal Reserve Chair Kevin Warsh's keynote speech at the Jackson Hole economic policy symposium on Friday reinforced expectations for higher interest rates, dampening prospects for increased capital expenditure on artificial intelligence.

Following the speech, US stocks closed lower, with the S&P 500 and Nasdaq Composite falling 0.25 percent and 0.52 percent, respectively. The Philadelphia Semiconductor Index extended its decline to 3.47 percent.

The Bank of Korea's 0.25 percentage point rate hike last week also added to negative investor sentiment. The rate increase, which marked the second consecutive hike by the central bank, raised concerns that tighter monetary conditions could weigh on corporate investment and economic growth.

Market heavyweight Samsung Electronics' shares gained 1.17 percent to 260,000 won, after plunging to as low as 246,000 won earlier in the day. SK hynix gained 1.27 percent to 1,674,000 won, after hitting an intraday low of 1,577,000 won.

Stocks tied to the two semiconductor giants traded mostly flat. SK Square gained 0.88 percent, while Samsung Electro-Mechanics rose 2.6 percent.

The secondary bourse Kosdaq ended the session at 834.29 points, shedding 0.49 percent from the previous session.

By Im Eun-byel (silverstar@heraldcorp.com)