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.
Summary
- South Korea approved a 20 trillion won sovereign investment account focused on AI, data centers and strategic industries.
- The new Korea Investment Corporation account will be allowed to invest in domestic assets for the first time.
- The government plans to submit legal amendments in August and expects the fund to begin operations in 2027.
- The announcement follows recent efforts to attract global technology investors and expand AI-related investment initiatives.
According to a South Korean government statement released Friday, the new account will be created under the Korea Investment Corporation (KIC), expanding the sovereign wealth fund’s mandate beyond overseas assets. The government said the account will begin with at least 20 trillion won in capital, funded through equity contributions from public institutions, including policy banks.
Unlike KIC’s existing portfolio, which primarily manages foreign assets, the new account will be permitted to invest inside South Korea. The government said the structure is intended to support industries considered strategically important while also generating long-term returns for future generations and strengthening national economic security, foreign exchange stability and financial markets.
The announcement also 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 surrounding the scale of AI-related capital spending.
South Korea expands KIC mandate to include domestic assets
Government officials said the investment account is designed to respond to rising international interest in South Korea’s technology sector, particularly projects linked to artificial intelligence infrastructure.
According to the government, a domestic anchor investor 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 recent stock market decline, the announcement follows several government measures introduced in recent weeks to stabilize financial markets.
The government also stressed that the account’s investment decisions will remain independent despite its public policy objectives. It said the new vehicle will operate separately from KIC’s existing foreign exchange reserve portfolio, preserving the institution’s current investment framework.
To enable the new structure, the government plans to submit amendments to the Korea Investment Corporation Act to the National Assembly in August. Fund operations are expected to begin in 2027 once the legislative process is completed.
Korea Investment Corporation managed approximately $232 billion in assets at the end of 2025. The sovereign wealth fund oversees money entrusted by the government, the Bank of Korea and other public institutions as part of the country’s foreign reserve management program.
AI investment strategy builds on startup funding plans
The latest initiative adds another layer to South Korea’s technology investment strategy after the government recently stepped up efforts to attract overseas venture capital into domestic startups.
As previously reported by crypto.news, President Lee Jae-myung met representatives from six Silicon Valley venture capital firms, including Sequoia Capital, Andreessen Horowitz, Khosla Ventures, Lightspeed Venture Partners, General Catalyst and New Enterprise Associates, encouraging them to increase investments in Korean startups.
The National Pension Service also signed separate memorandums of understanding with the six firms to establish long-term investment cooperation covering investment opportunities, market information sharing and stronger links between Korea’s startup ecosystem and international venture capital networks.
Asiae reported that the government is simultaneously preparing a proposed National Growth Fund valued at 200 trillion won to finance industries such as artificial intelligence and semiconductors. The publication said policymakers expect public funding, private investment and overseas capital to enter the domestic technology sector together if the initiatives proceed as planned.
While welcoming stronger international participation, Asiae also argued that South Korea will need policies that encourage successful startups to continue expanding domestically. The newspaper pointed to stock option rules, visa policies for foreign specialists, merger and acquisition activity, commercialization of university research and administrative procedures as areas that could influence long-term investment decisions.
Digital asset policies continue alongside technology funding
The sovereign investment plan has emerged alongside several technology-related policy initiatives that South Korean authorities have been advancing during recent months.
Earlier this week, a policy report published by Hashed Open Research and the Solana Policy Institute recommended introducing interim licensing guidance for stablecoins before lawmakers complete the country’s Digital Asset Basic Act. The report proposed a phased regulatory framework covering stablecoin issuance, payment services and foreign-issued tokens while comprehensive legislation remains under discussion.
The report also summarized views presented during a June policy symposium, including ongoing discussions over whether banks should retain majority ownership of stablecoin issuers while fintech companies manage operations. Those recommendations remain advisory and have not been adopted into law.
Separately, the Financial Services Commission has said it intends to consolidate ten pending digital asset proposals into a government-backed Digital Asset Basic Act covering stablecoin issuance, exchange conduct, disclosures, internal controls and operational resilience, although no implementation timetable has been announced.
