Korean stocks break through 5,000 points! South Korea accelerates its AI strategy, aiming to build an "Asian AI infrastructure hub."

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When South Korea’s stock market benchmark, the Kospi, rises above 5000 points, an economy previously viewed mainly as a cyclical export market is being revalued by capital.

On Thursday, the Kospi index surged as much as 2.2% intraday, surpassing the 5000-point target proposed by President Lee Jae-myung. Over the past 12 months, this index has gained more than 95%, making it one of the world’s top-performing major stock indices. Leading stocks include Samsung Electronics, SK Hynix, and Hyundai Motor, while the Korean won also strengthened slightly against the US dollar.

On the surface, this is a rally led by big tech stocks; but on a deeper level, the market is reassessing South Korea’s position in the global AI industrial chain—from a traditional cyclical export nation to a key beneficiary in the era of AI computing power and data centers. The sustainability of this rally increasingly points to a previously underestimated sector: AI infrastructure.

Morgan Stanley believes that South Korea is entering an “infrastructure reinvestment cycle” driven by artificial intelligence, a shift as significant as the semiconductor capital expenditure wave of the past decade. Unlike previous cycles that revolved around chip prices and export fluctuations, the core opportunity this time is the rapid proliferation of AI services, which is systematically boosting long-term domestic demand for computing power, electricity, and power grids—giving rise to a multi-layered investment theme spanning data center operations, power equipment, and energy systems.

AI Service Spread Forces Computing Power “To Flow Back Domestically”

The driving factor behind this Kospi surge remains AI.

On the hardware front, South Korea’s dominance in global memory chip production directly benefits from the data center construction boom. For Samsung Electronics and SK Hynix, the rebound in memory chip prices has quickly translated into profit recovery and flexible stock prices, becoming a key force behind Kospi’s breakthrough to 5000 points.

But Morgan Stanley notes that AI demand is shifting from the “chip price cycle” to deeper infrastructure layers.

Over the past year, South Korean AI services have rapidly penetrated both corporate and consumer sectors. On the B2B side, AI is deeply embedded in coding, video production, demand forecasting, ad optimization, logistics path planning, and even DNA analysis. On the consumer side, ChatGPT’s monthly active users in Korea have reached 18 million, and its integration with KakaoTalk is seen by Morgan Stanley as a “key leap from tech enthusiasts to mass users.”

More importantly, the expected rollout of AI agents in 2026 means AI use cases will shift from “assisting decisions” to “directly executing tasks,” driving a nonlinear surge in demand for inference computing power.

Morgan Stanley points out that as AI usage frequency sharply rises and network and power constraints intensify, “deploying GPU clusters locally” is now superior for both economics and stability. The commercial feasibility of local AI data centers is thus being revalued.

“Neocloud” Arrives: Korean Data Centers Enter Heavy Asset Cycle

The real turning point comes with the dense announcement of multiple “Neocloud”-level projects.

Morgan Stanley’s research shows that over the past six months, AI data center projects in Korea that have been confirmed or are under evaluation include:

SK Telecom/AWS’s 100MW AI data center in Ulsan;Samsung SDS’s 120MW AI data center in Gumi, with a budget as high as 8 trillion KRW;The National AI Computing Center project (40MW), with a consortium led by Samsung SDS bidding, and government funding around 30%;Potential projects by OpenAI with SK Group and Samsung Group, with site selection concentrated in Jeollanam-do.

The common features of these projects: large scale, long construction cycles, power intensiveness, and heavy asset burden. For this reason, two major concerns that used to trouble companies—token demand uncertainty and GPU depreciation risk—are now partly offset by “computing power security” and “national strategic attributes.”

Morgan Stanley clearly states that global AI giants (like OpenAI and AWS) have begun proactively demanding the construction of AI-optimized data centers in South Korea, which itself signals increased visibility on future demand.

The Lee Jae-myung Government’s “AI Superhighway”

If corporate investment is tackling “willingness to build,” then policy is tackling “ability to build.”

Morgan Stanley summarizes the Lee Jae-myung administration’s AI policy in four keywords: Sovereign AI, Infrastructure, Regulatory Reform, Talent Development. Among these, the “AI Superhighway” is the most realistically binding initiative.

The core of this plan is not just GPUs but the physical infrastructure supporting AI:

Data centers are classified as “national strategic technology facilities,” receiving tax and policy support;Approximately 100 trillion KRW planned for public-private partnership investment;Promotion of national-level AI computing centers to provide computing power for startups and government projects.

Notably, the government is actively promoting the relocation of data centers outside the capital area, in line with its goals to “revitalize local economies” and “decentralize power consumption.” Thus, Jeollanam-do is becoming the intersection of policy and projects.

From a market perspective, this policy direction echoes the “political significance” of the Kospi breaking 5000 points. The index’s record high not only reflects asset price performance but also reinforces President Lee’s agenda to improve corporate governance and correct long-term valuation discounts. Most bulls believe that as long as the “Korea discount”—linked to corporate governance-driven long-term valuation suppression—has not fully disappeared, there remains room for further market revaluation.

From Computing Power to Electricity: The Real Bottleneck Is the Power Grid

The expansion of AI data centers quickly runs into structural challenges within Korea’s energy system.

Jeollanam-do possesses abundant renewable energy but has long been constrained by transmission bottlenecks, preventing large volumes of green electricity from being effectively delivered. Morgan Stanley sees this as the practical starting point for the “Energy Highway” plan.

The core of this project is to reconstruct South Korea’s power delivery network using high-voltage direct current (HVDC) technology. Compared to traditional AC transmission, HVDC has lower losses over long distances and large capacities, and is better suited for efficient delivery of renewable energy from coastal and rural areas to demand centers.

The plan centers on HVDC, targeting a U-shaped, national-level backbone transmission network through Korea’s west, south, and east within the next 20 years. Compared to traditional AC, HVDC offers significant advantages for long distances, high capacity, submarine transmission, and system stability. By 2030, the West Sea HVDC corridor could be completed first, supplying up to 20 GW of clean electricity to Seoul and its vicinity, with further expansion nationwide throughout the 2030s.

From an investment logic standpoint, AI data centers, grid upgrades, and renewable energy expansion are all being incorporated into the same long-term capex curve.

From Index to Stocks: AI Infrastructure Becomes the Repricing Pivot

Following the Kospi’s breach of 5000 points, market focus is shifting from “how much further can it rise” to “where are the structural opportunities.”

On the direct beneficiary end, Samsung SDS is seen as one of the highest certainty targets in the AI data center investment theme. Its 120MW data center project in Gumi and its lead role in the National AI Computing Center position it at the core of computing power infrastructure.

On the indirect beneficiary end, the flexibility of the power equipment and transmission & substation sectors is being reassessed. As AI data centers push for higher voltage capacity and power quality, demand for ultra-high voltage transformers, GIS equipment, and substation EPC is accelerating, bringing companies like HD Hyundai Electric and LS Electric into investor focus.

In the short term, Kospi’s strong performance benefits from the AI hardware cycle and easing external uncertainties; but in the longer term, what is truly being repriced is South Korea’s role in the global AI infrastructure system.

This is why more and more investors are treating this rally as a structural transformation, rather than just a tech-stock bull market. As the “Korea discount” gradually disappears, AI infrastructure is becoming the key pivot connecting policy, industry, and capital markets.

Risk Warning and DisclaimerThe market has risks and investment should be made cautiously. This article does not constitute personal investment advice and does not take into account special investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investments made based on this article are at the user’s own risk.

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