South Korea has approved a new 20 trillion won account inside its sovereign wealth fund to finance AI, data centers and other strategic industries — the first time the fund can invest domestically. The government plans to submit legal amendments in August, with operations set to begin in 2027, as the Kospi index heads for its worst month on record.
South Korea has approved plans to establish a new 20 trillion won investment account within its sovereign wealth fund to finance artificial intelligence, data centers and other strategic industries, while allowing domestic investments for the first time. According to a government statement released Friday, the account will be created under the Korea Investment Corporation (KIC). It will be funded with at least 20 trillion won in capital from equity contributions by public institutions, including policy banks.
First mandate to invest at home
KIC's existing portfolio mainly manages foreign assets, but the new account will be permitted to invest inside South Korea. The government said the structure is meant to support strategically important industries while generating long-term returns and strengthening national economic security, foreign exchange stability and financial markets.
The announcement comes as South Korean equities remain under pressure. The Kospi index has fallen 34% during July, putting it on track for its worst monthly performance on record after investors sold shares of the country's largest semiconductor companies over concerns about the scale of AI-related capital spending.
Account designed to draw foreign capital
Officials said the account is designed to respond to rising international interest in South Korea's technology sector, particularly AI infrastructure projects. A domestic anchor investor, the government said, will help attract capital from foreign sovereign wealth funds and global asset managers seeking exposure to Korean technology investments.
Although officials did not directly connect the initiative to the stock market decline, the announcement follows several government measures introduced in recent weeks to stabilize financial markets. The government stressed that the new vehicle's investment decisions will remain independent and will operate separately from KIC's existing foreign exchange reserve portfolio.
Legislation due in August, fund to launch in 2027
The government plans to submit amendments to the Korea Investment Corporation Act to the National Assembly in August, with fund operations expected to begin in 2027 once the legislative process is completed. KIC managed approximately $232 billion in assets at the end of 2025, overseeing money entrusted by the government, the Bank of Korea and other public institutions as part of the country's foreign reserve management program.
This adds to a broader push to draw AI investment into the country. President Lee Jae-myung has met representatives from six Silicon Valley venture capital firms, including Sequoia Capital and Andreessen Horowitz, encouraging them to increase investments in Korean startups, while the National Pension Service has signed separate memorandums of understanding with the same firms.
Source: crypto.news
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