[Edaily Marketin YunJi Kim Reporter Park So-young] “With its technological capabilities, outstanding talent, competitive companies, and growth potential, South Korea is an indispensable market in Asia.”

This statement summarizes the assessments of global asset managers and capital market professionals who have visited South Korea so far this year. With the spread of artificial intelligence (AI) bringing renewed attention to the competitiveness of Korea’s high-tech manufacturing sector—including semiconductors—the perception of Korea is shifting. This shift is also evident in investment targets. While investment in Korea used to focus primarily on large publicly traded companies such as Samsung Electronics and SK Hynix, it has recently expanded to include unlisted companies, infrastructure, and bonds, indicating that a reevaluation of the industry is spreading across the capital market as a whole.

Investment Opportunities

Created by the Manufacturing Ecosystem… Expanding to Unlisted Companies and Infrastructure

According to the Ministry of Trade, Industry and Energy on the 12th, reported foreign direct investment (FDI) for the first three quarters of this year totaled $22.9 billion (approximately 30.773 trillion won), a 10.8% increase compared to the same period last year, while actual investment disbursements rose by 30.6%. The government explained that investment continued to flow into high-tech industries—such as semiconductor materials, parts, and equipment, as well as AI data centers—following the chemical and pharmaceutical sectors.

The investment banking (IB) sector is also feeling this trend firsthand. While exact statistics are unavailable, industry sources report that, based on their observations, requests from overseas investment banks for company visits to domestic firms have doubled compared to last year. Given that such requests had already doubled last year compared to the previous year, this represents a roughly fourfold increase over the past two years. There are even reports that investors who have not invested in the Korean market since the 1980s are now turning their attention to Korea.

Underlying this shift is the competitiveness of Korea’s manufacturing sector, particularly in semiconductors. As global AI investment expands and demand for advanced semiconductors—such as High-Bandwidth Memory (HBM)—rises, the technological capabilities and supply chains of Korea’s semiconductor industry, centered on Samsung Electronics and SK Hynix, are drawing significant attention. In particular, the fact that a robust industrial ecosystem has been established—encompassing not only large conglomerates but also specialized materials, parts, and equipment firms, as well as AI semiconductor startups—is attracting the interest of global investors.

An official from a French capital markets firm who visited Korea this year stated, “In the past, there were relatively more semiconductor-related investment targets in Taiwan and Japan, so Korea was merely a place to gauge market sentiment.” He added, “Recently, however, investment targets have diversified to include not only large conglomerates but also startups, and as interest from global investors has surged significantly, competition has become fierce.”

Even in the private market, companies worthy of foreign capital’s attention are emerging. FuriosaAI, a domestic AI semiconductor startup, sought to raise substantial funds this year during its pre-IPO process, with its valuation estimated at around 4 trillion won. While global investors previously accessed the Korean market through large-cap listed semiconductor stocks, analysts note that options for direct investment in technology companies in their growth stages are now expanding.

As corporate investment centered on semiconductors and AI increases, the infrastructure supporting these sectors is also emerging as a new investment destination. This is because the expansion of semiconductor factories and AI data centers requires massive amounts of power, cooling, and communication networks, meaning that industrial growth directly translates into increased demand for infrastructure. In particular, global capital market experts note that as power demand rises rapidly due to the expansion of AI and data centers, investment opportunities are growing across the entire power generation, transmission, and grid sectors.

In fact, global asset managers are examining the South Korean infrastructure market by grouping power and data centers together. KKR is pursuing a 2 trillion won renewable energy platform with SK, while also deciding to invest in SK Horizon, a company established by spinning off SK Telecom’s data center business. Brookfield is also partnering with Naver and NVIDIA to expand AI data center infrastructure in South Korea.

An official from a British asset management firm stated, “The energy transition, demand for data center development driven by AI and electrification, and transportation infrastructure supporting regional logistics are key investment opportunities,” adding, “South Korea, in particular, is seeing rapid growth in demand for data centers and logistics, making it a highly attractive destination for real asset investments.”

Global Capital Flowing Even into Government Bonds… Sustainability Is Key

Global capital’s interest is not limited to corporations and infrastructure. As South Korean government bonds have been gradually included in FTSE Russell’s World Government Bond Index (WGBI) since last April, the investment base for long-term institutional investors—such as global pension funds and asset management firms—is also broadening. In fact, from March 30 to October 2, cumulative net purchases of Korean government bonds by foreign investors reached approximately 42.4 trillion won. In particular, net purchases amounting to several trillion won were made in medium- and long-term government bonds, such as 10-year and 30-year issues. Although foreign buying of government bonds has recently slowed and selling has emerged, particularly in short-term issues, analysts note that the inclusion in the WGBI is significant in that it has broadened the investment base for global institutional investors in Korean government bonds.

Overseas asset managers are increasingly viewing Korea not merely as a source of capital but as a genuine investment destination. Overseas asset managers, including Franklin Templeton, have recently been raising funds from domestic institutional investors while also assessing investment conditions and asset allocation opportunities in the Korean market. While Korea was previously perceived as one of Asia’s fundraising hubs, industry analysts note that its importance as an investment destination where actual capital can be deployed has also been growing.

However, some argue that there are still significant challenges to overcome before this recent interest can translate into a long-term “Korea premium.” They explain that exit conditions in the private market remain a major obstacle, and that regulatory uncertainty, won volatility, and corporate governance issues are also factors that foreign institutional investors consider when deciding whether to invest. It is pointed out that, given the heightened interest in Korea, it is crucial to establish market conditions that can translate this interest into sustained investment.

An official from the domestic capital market stated, “The fact that interest, which began in the semiconductor and manufacturing sectors, is spreading to unlisted companies, infrastructure such as power and data centers, and even government bonds represents a trend different from the past,” adding, “The key going forward is whether this interest will lead to long-term capital allocation rather than merely a one-time inflow of funds.” The official added, “Whether Korea can establish itself as a market worthy of sustained investment across various asset classes will determine the longevity of the ‘Korea premium.’”