South Korean shares extended their winning streak for the seventh day in a row, as investors were optimistic after newly elected President Lee Jae-myung announced plans to overhaul South Korea's tax system to encourage higher dividends and enhance stock market appeal.

Lee also called for stricter regulations to curb unfair trading and proposed a "one-strike-out" policy for illegal market activities.

The Korea Composite Stock Price Index or Kospi rose by 12.99 points, or 0.45%, to end at 2,920.03. The Kosdaq gained 3.16 points, or 0.4%, to close at 789.45.

In economic data, Depository corporations in South Korea increased industrial lending by 17.3 trillion won in the first quarter from a year earlier, driven by rising business demand, the Bank of Korea said earlier this week.

Working capital loans rose 9.5 trillion won, while facility investment lending grew 7.8 trillion won in Q1 from the same quarter last year. Depository banks extended 13.8 trillion won in loans while non-bank institutions offered loans of 3.5 trillion won in the quarter.

In corporate data, Hanwha Systems (KRX:272210) and BAE Systems signed a memorandum of understanding to co-develop a multi-sensor satellite system that targets the global intelligence, surveillance, and reconnaissance (ISR) markets, BAE Systems said earlier this week.

The collaboration will bring together BAE's ultra-wide band RF sensors with Hanwha Systems' expertise in next-generation Synthetic Aperture Radar (SAR) to create a space-based ISR platform. The planned system will integrate RF and SAR data using onboard AI-powered edge processors for real-time intelligence delivery.

Shares of the South Korean aerospace and defense company rose more than 1% at market close on Thursday.