Korea Plans $14 Billion for Wealth Fund’s AI Bets After Rout

South Korea plans to inject 20 trillion won ($13.9 billion) into its sovereign wealth fund for strategic investments in AI, data centers 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. 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 didn’t link the government’s plan to the ongoing market turmoil, the announcement comes after the nation’s equity market suffered a sharp rout this week and follows a slew of recent government measures to stabilize the stock market.

The decision is driven by the need to “act proactively” on growing global investment interest in Korea, fueled by the nation’s core competitiveness in building an AI ecosystem, the government said.

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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% 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’s underpinning the artificial intelligence sector. 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 next month to enable the new account, and plans to launch fund operations next year.

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 $232 billion in assets at the end of last year, handling funds entrusted by the government, the Bank of Korea, and public entities to manage the nation’s foreign exchange reserves.