South Korea plans US$14 billion for wealth fund’s AI bets after US$2 trillion rout
This is driven by the need to “act proactively” on growing global investment interest in Korea, says the government
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SOUTH Korea plans to inject 20 trillion won (US$13.9 billion) into its sovereign wealth fund for strategic investments in artificial intelligence, data centres and infrastructure, expanding its mandate to include domestic assets for the first time following a rout in technology stocks.
The government will create the account within the Korea Investment Corporation, according to a statement on Friday (Jul 31).
It will start with a minimum of 20 trillion won funded through sources including equity contributions from public institutions such as policy banks, the statement said.
While the statement did not link the government’s plan to the ongoing market turmoil, the announcement comes after the nation’s equity market suffered a sharp US$2 trillion rout this week and follows a slew of recent government measures to stabilise the stock market.
The decision is driven by the need to “act proactively” on growing global investment interest in Korea, fuelled by the nation’s core competitiveness in building an AI ecosystem, the government said.
An anchor investor is needed to draw global capital from foreign sovereign wealth funds and asset managers, the government said.
It will give the fund a mandate to invest into local assets, moving beyond its traditional foreign asset portfolio.
The government added that the new account will support the growth of strategic industries while generating revenue for future generations, serving as a buffer for national economic security, foreign exchange and asset markets.
The Kospi index has tumbled 34 per cent in July, set for its worst month on record, as investors sold the nation’s two giant chipmakers on growing doubts over the massive capital expenditure that is underpinning the AI sector.
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Sentiment remains jittery as investors wait to see how effective the government will be in curbing leverage and volatility.
The government aims to submit a revision of the Korea Investment Corporation Act to Parliament in August to enable the new account, and plans to launch fund operations in 2027.
Still, management of the new account will maintain full independence in its investment decisions.
The account will be strictly separated from Korea Investment Corporation’s existing foreign exchange reserve portfolio, the government said.
Korea Investment Corporation managed US$232 billion in assets at the end of 2025, handling funds entrusted by the government, the Bank of Korea, and public entities to manage the nation’s foreign exchange reserves. BLOOMBERG
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