South Korea's $206.5 billion sovereign fund launches maximum strategic transformation to target the China-US tech circuit to hedge geopolitical risks

The Zhitong Finance App learned that Korea's sovereign wealth fund Korea Investment Corporation (KIC) is speeding up the layout of the technology circuit and plans to drastically increase the allocation ratio of global technology startups and venture capital funds to deepen strategic investment in disruptive technology fields such as artificial intelligence. In its latest strategic transformation, this sovereign fund, which manages assets of 206.5 billion US dollars, clearly uses alternative assets as the core gripper for increasing medium- to long-term returns, while also showing a differentiated layout for the Chinese and US technology markets.

In an exclusive interview, KIC CEO Park Il-young revealed that the fund is building a technology investment map through three major channels: investing in the entire AI industry chain in the open market, from data centers and energy infrastructure to core algorithms and application layers; using the Silicon Valley Resource Network to strengthen cooperation with top venture capital institutions through the San Francisco office; exploring active investment opportunities in China's technology sector; and seeking higher participation based on passive index tracking. Currently, KIC's US stock holdings account for 65% of the public stock portfolio, of which 3.1 billion US dollars hold Nvidia (NVDA.US) and 2.7 billion US dollars hold Microsoft (MSFT.US) positions, which are not included in technology positions held indirectly through other investment instruments.

Behind this strategic innovation is KIC's urgent need to break through performance. This sovereign fund, which has been in existence for 20 years and has an initial capital of only 1 billion US dollars, has achieved an annualized return of 4.75%, but the annualized return of 4.75% is still under peer pressure. The Norwegian sovereign wealth fund achieved a 13% return during the same period, and KIC's income level of 8.49% last year needs to be raised urgently. The new head, Park Il-young, has been promoting the fund to establish a “trend forward+long-term” investment philosophy since taking office in September. His team believes that the strong cycle of US technology stocks is far from over, and that the structural opportunities in the Chinese market are worth actively exploring.

It is worth noting that KIC's layout strategy in the field of venture capital is undergoing qualitative changes. Although the current investment scale of startups is still niche compared to the private equity sector, the fund has clearly used early-stage technology investments as a “watchtower” for insight into cutting-edge trends. Park Il-young's dual professional background injects a unique gene into this: a former government official who worked at the World Bank and is deeply involved in the renewable energy sector, experienced Korean startup ecosystem nurturing eight years ago and saw many AI platform companies grow from seed to industry leaders. This practical understanding made the team more firmly believe in the value logic of “early card positions”, establish technical insight through venture capital, and anchor coordinates for subsequent large-scale investments.

KIC has shown a cautious optimism when it comes to technology investment in China. Park Il-young admits that geopolitical games and macroeconomic fluctuations present real challenges, but the innovative momentum of the Chinese market cannot be ignored. The fund is trying to break through the passive investment framework and find strategic entry points in hard technology fields such as semiconductors and new energy. This balancing act reflects KIC's global allocation philosophy: not only using US technology stocks as a ballast stone, but also trying to capture excess profits in the East Asian technology landscape, while hedging the risk of surging electricity demand brought about by AI through renewable energy investments.

This transformation is essentially a paradigm upgrade for sovereign funds under the new technological revolution. When traditional asset allocation logic was disrupted by AI, KIC chose to step in at the source of innovation with a more active attitude to build long-term competitiveness at infrastructure levels such as data center construction, chip research and development, and the energy revolution. This “infrastructure+application ecosystem” two-wheel drive strategy may provide a new model for global sovereign wealth funds to respond to technological changes.