South Korea has approved plans to establish a new ₹1,64,000 crore (20 trillion won) investment account within its sovereign wealth fund to finance artificial intelligence, data centers and other strategic industries. 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 ₹1,64,000 crore 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 for the first time.
South Korean pension funds have pivoted to net buying on KOSPI for the first time this year, purchasing a net 684 billion won ($46.8 million) through July 24, according to latest market data. This marks the end of a six-month net selling streak and signals renewed institutional confidence in Korean equities. SK Hynix was the top pick, attracting 425.8 billion won in net purchases, highlighting pension funds' bet on the memory chip rebound as the sector shows signs of recovery. However, 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's venture capital partnerships with Silicon Valley firms have generated significant market optimism, with the KOSDAQ outperforming as investors responded positively to the potential for greater startup funding access. According to Aju Press, the startup-heavy market has struggled to keep pace with the KOSPI's AI-driven rally, but the VC partnerships offer a sentiment boost rather than a structural turning point. Market analysts note that the biggest structural weakness of KOSDAQ has been technology companies' struggles to differentiate themselves and secure sufficient capital for long-term growth, with cooperation with leading Silicon Valley venture capital firms potentially enhancing global credibility of Korean technology companies.
South Korea has significantly expanded its venture capital partnerships with Silicon Valley firms, with the National Pension Service (NPS) now leading the initiative alongside Korea Investment Corp. (KIC). The government has partnered with Sequoia Capital, Andreessen Horowitz (a16z), Khosla Ventures, Lightspeed Venture Partners, General Catalyst and New Enterprise Associates (NEA) to increase investments in South Korean startups. The six venture firms collectively manage roughly $313 billion in assets, while the NPS oversees about 1.69 quadrillion won ($1.2 trillion). Six leading Silicon Valley venture capital firms have now signed a strategic investment MOU with Korea's National Pension Service, aiming to co-develop investment opportunities and strengthen global venture capital networks.
The latest initiatives come as the South Korean government continues introducing policies designed to draw overseas investors into domestic technology companies while supporting local innovation through public funding initiatives. The government is pairing the new sovereign fund with its planned National Growth Fund, a 200 trillion won investment vehicle expected to support future industries including artificial intelligence and semiconductors. Korea Investment Corporation managed approximately $232 billion in assets at the end of 2025, and 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. 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.
