As the benchmark KOSPI index surpassed 5000 points, an economy previously viewed more as a cyclical export market is being fundamentally revalued by capital. On Thursday, the KOSPI index surged as much as 2.2% intraday, breaking through the 5000-point target previously set by President Yoon Suk Yeol. Over the past 12 months, the index has accumulated gains exceeding 95%, ranking it among the world's best-performing major equity indices. Heavyweight stocks like Samsung Electronics, SK Hynix, and Hyundai Motor led the advance, while the Korean Won also strengthened modestly against the US Dollar.
Superficially, this appears to be a rally driven by technology heavyweights; however, the deeper transformation lies in the market's reassessment of South Korea's role in the global AI supply chain—shifting from a traditional cyclical exporter to a key beneficiary in the era of AI computing power and data centers. The sustainability of this rally is increasingly pointing towards a previously underestimated sector: AI infrastructure. Morgan Stanley believes South Korea is entering an AI-driven "infrastructure re-investment cycle," whose significance rivals the semiconductor capital expenditure wave of the past decade. Unlike previous fluctuations tied to chip prices and export cycles, the core opportunity this time lies in the fact that the rapid proliferation of AI services is systematically driving up long-term demand for domestic computing power, electricity, and grid capacity, thereby creating a multi-layered investment theme spanning data center operations, power equipment, and energy systems. The diffusion of AI services is compelling a "repatriation of computing power" to local soil. The primary catalyst for the KOSPI's rise remains AI. On the hardware front, South Korea's dominant position in the global memory chip sector allows it to benefit directly from the data center construction boom. For Samsung Electronics and SK Hynix, the recovery in memory chip prices has swiftly translated into profit restoration and stock price resilience, becoming a key driver behind the KOSPI breaking the 5000-point barrier. However, Morgan Stanley notes that the evolution of AI demand is extending beyond the "chip price cycle" to more foundational infrastructure.
Over the past year, AI services in South Korea have accelerated their penetration simultaneously in both enterprise and consumer segments. In the B2B sector, AI is now deeply embedded in high-value-added scenarios such as coding, video production, demand forecasting, ad optimization, logistics route planning, and even DNA analysis; in the C2C segment, ChatGPT's monthly active users in South Korea have reached 18 million, and its integration with KakaoTalk is viewed by Morgan Stanley as a critical "leap from tech enthusiasts to the mass market." More importantly, the anticipated deployment of AI agents by 2026 signifies that AI use cases will transition from "assisting decisions" to "directly executing tasks," leading to a non-linear surge in demand for inference computing power.
Morgan Stanley points out that against the backdrop of rapidly rising AI usage frequency and increasingly prominent network and power constraints, "deploying GPU clusters locally" is becoming economically and operationally advantageous. Consequently, the commercial viability of domestic AI data centers is being re-evaluated. The "Neocloud" initiative marks a pivotal shift, propelling South Korea's data center sector into a heavy-asset investment cycle. The true inflection point has arrived with the密集 announcement of multiple "Neocloud"-scale projects. A Morgan Stanley report highlights that, over the past six months, confirmed or under-evaluation AI data center projects in South Korea include:
A 100MW-class AI data center in Ulsan by SK Telecom / AWS; A 120MW AI data center in Gumi by Samsung SDS, with a budget reaching 8 trillion won; The National AI Computing Center project (40MW), being bid on by a consortium led by Samsung SDS, with approximately 30% government funding; Potential projects separately advanced by OpenAI with the SK Group and Samsung Group, with site selection concentrated in South Jeolla Province.
These projects share common characteristics: large scale, long development cycles, high electricity density, and significant asset intensity. Precisely because of this, two major concerns that previously troubled enterprises—uncertainty in token demand and GPU depreciation risk—are now being partially offset by considerations of "computing power security" and "national strategic importance." Morgan Stanley explicitly states that global AI giants (such as OpenAI, AWS) have begun proactively requesting the construction of AI-optimized data centers in South Korea, which in itself is a signal of rising demand visibility. The Yoon Suk Yeol administration's "AI Superhighway" policy framework is providing critical support. If corporate investment addresses the "willingness to build," then government policy is tackling the "ability to build." Morgan Stanley summarizes the Yoon administration's AI policy around four key themes: sovereign AI, infrastructure, regulatory reform, and talent development. Among these, the "AI Superhighway" is the most immediately impactful component. The core of this plan extends beyond just GPUs to the physical infrastructure underpinning AI:
Data centers are designated as "National Strategic Technology Facilities," eligible for tax benefits and policy support; Approximately 100 trillion won in public-private partnership investment is planned; A push for a National AI Computing Center to provide computing power for startups and government projects.
More notably, the government explicitly promotes the migration of data centers away from the capital region, aligning closely with its goals of "revitalizing regional economies" and "decentralizing power consumption." Consequently, South Jeolla Province has become a focal point for both policy and project convergence. From a market perspective, this policy direction resonates with the "political implications" of the KOSPI breaking 5000. The index reaching new highs is not merely an asset price phenomenon but also reinforces President Yoon's policy commitments to improving corporate governance and repairing long-standing valuation discounts. Bulls generally believe that as the "Korea Discount"—the long-term valuation suppression related to corporate governance—gradually recedes, there remains room for further market re-rating. The expansion of AI data centers is quickly encountering structural issues within South Korea's energy system. South Jeolla Province possesses abundant renewable energy resources but has long been hampered by transmission bottlenecks, preventing large amounts of green electricity from being efficiently delivered. Morgan Stanley identifies this as the practical starting point for the "Energy Highway" plan. The core of this project involves reconstructing South Korea's power transmission network using High-Voltage Direct Current (HVDC) technology. Compared to traditional alternating current transmission, HVDC offers lower losses over long distances and for large capacities, making it more suitable for efficiently transporting renewable energy from coastal and rural areas to demand centers. Centered on HVDC technology, the plan aims to construct a U-shaped national transmission backbone spanning South Korea's west-south-east regions over the next 20 years. HVDC holds clear advantages over traditional AC in long-distance, high-capacity, subsea transmission, and system stability. By 2030, the west coast HVDC corridor is expected to be completed first, delivering up to 20 GW of clean power to the Seoul metropolitan area, with subsequent nationwide extension through the 2030s. From an investment logic perspective, AI data centers, grid upgrades, and renewable energy expansion are being integrated into the same long-term capital expenditure curve.
Following the KOSPI's breach of 5000, the market's focus is shifting from "how much further can it rise" to "where are the structural opportunities." On the direct beneficiary side, Samsung SDS is seen as one of the most certain plays on the AI data center investment theme. Its advancement of a 120MW AI data center in Gumi, coupled with its leadership in the National AI Computing Center project, positions it centrally within the computing power infrastructure layer. On the indirect beneficiary side, the potential of power equipment and transmission/distribution segments is being reassessed. As AI data centers' requirements for high-voltage capacity and power quality intensify, demand for ultra-high-voltage transformers, GIS equipment, and substation EPC is accelerating, bringing companies like HD Hyundai Electric and LS Electric into investors' sights. In the short term, the KOSPI's strong performance benefits from the AI hardware cycle and easing external uncertainties; however, over a longer horizon, what is truly being revalued by the market is South Korea's role within the global AI infrastructure ecosystem. This is why an increasing number of investors are beginning to interpret this market phase as a structural transformation, rather than a simple technology stock bull run. As the "Korea Discount" gradually fades, AI infrastructure is emerging as the critical pivot connecting policy, industry, and capital markets.
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