South Korean shares closed higher as retail investors ramped up their purchases, owing to an improvement in domestic consumer sentiment in October after contracting for two months straight.

The Korea Composite Stock Price Index, or Kospi, was up 28.92 points, or 1.12%, to close at 2,599.62. The Kosdaq also increased by 6.85 points, or 0.93%, to 745.19.

In economic news, South Korea's composite consumer sentiment index increased by 1.7 points to 101.7 in October from 100 in September, according to data released by the Bank of Korea on Wednesday.

A reading above 100 indicates an improving outlook, while a reading under 100 suggests pessimism.

Sentiment toward current living standards remained steady at 90, while sentiment on the future outlook added two points to reach 96.

The outlook for future household income rose to 99 from 98 in the previous month, and sentiment for future household spending likewise increased by one point to 109.

Optimism regarding current local economic conditions was two points higher at 73, and the reading for future domestic economic conditions was also two points higher at 81.

In corporate news, Samsung Electro-Mechanics (KRX:009150) began the mass production of three new C0G capacitor models, including the ultra-small 0201-inch CL03C221JB31PN#, offering capacitance values from 100 to 220 pF.

Shares of the company rose nearly 2% at market close on Wednesday.

In other news, HJ Shipbuilding & Construction (KRX:097230) secured a combined cycle power plant construction work contract from Korea Electric Power Corporation (KRX:015760).

The deal is valued at 160.20 billion won, HJ Shipbuilding said in a Wednesday corporate disclosure.

Shares of HJ Shipbuilding fell over 5% at market close while those of Korea Electric Power Corporation rose nearly 1%.