(URGENT) Seoul shares open 3.85 pct higher amid eased woes over AI, Hormuz deal hopes

Seoul's stock market experienced a significant rally on August 5, with shares rising by over 3.5 percent. This increase was driven by a combination of factors, including eased concerns over the profitability of artificial intelligence (AI) investments and optimism surrounding the potential for a U.S.-Iran interim agreement regarding the Strait of Hormuz. The Korea Composite Stock Price Index (KOSPI) surged 3.76 percent, or 239.31 points, to close at 6,598.26, marking a high of 6,674.66 throughout the day.

The market's sentiment improved further on Tuesday, when the index rose by 1.62 percent after suffering a 5.12 percent decline the previous day. The trading volume was moderate, with 335.16 million shares exchanged, equating to 25.21 trillion won ($17.7 billion). Generally, more shares were purchased than sold, with foreigners netting a gain of 1.45 trillion won, while institutions and individuals collectively sold 283.5 billion won and 1.18 trillion won, respectively.

In response to the market's sharp upward trend, the Korea Exchange (KRX) temporarily activated a buy-side sidecar for the KOSPI index for five minutes at 9:25 a.m. A notable shift in investor behavior came from the tech sector, where gains in technology stocks fueled the rally.

Overnight, U.S. stocks also benefited from optimism surrounding the potential reopening of the critical shipping route at the Strait of Hormuz. The Dow Jones Industrial Average climbed 1.71 percent to 54,085.88, while the tech-focused Nasdaq Composite surged 2.59 percent to 26,584.99.

The optimism surrounding Hormuz's reopening and strong earnings from U.S. tech firms alleviated concerns about heavy investments in the AI sector. Analyst Kang Jin-hyeok from Shinhan Securities Co. attributed the market surge to these positive developments. Leading tech companies such as Samsung Electronics and SK hynix showed remarkable gains, with Samsung Electronics rising 2.5 percent to 246,000 won and SK hynix climbing 5.77 percent to 1,668,000 won.

Among the declining stocks, the leading refiner SK Innovation experienced a 1.89 percent drop to 109,200 won, and national carrier Korean Air fell 2.62 percent to 122,500 won. The Korean won closed at 1,424.5 won against the U.S. dollar, marking an 8 won decrease from the prior day's close.