On Thursday, lawmakers in South Korea passed a special bill to facilitate the country’s $350 billion investment pledge in strategic industries in the United States under last year’s trade agreement.

According to Reuters, the law puts into effect a trade deal signed in November last year, in which South Korea pledged $200 billion in investments across strategic U.S. industries and another $150 billion toward shipbuilding cooperation with the United States in return for favorable tariff conditions.

How the $350B Investment Plan Will Unfold

Per the Reuters article, the legislation, expected to take effect in about three months, prioritizes investments in sectors such as shipbuilding, semiconductors, pharmaceuticals, critical minerals, energy, AI and quantum computing, with the flexibility to add additional industries through presidential decree.

However, as per the abovementioned Reuters article, South Korean officials have expressed concerns that large outbound investments in the United States could put additional pressure on the already weak Korean won, emphasizing that investment decisions will be based on foreign exchange market conditions and commercial viability.

According to a CNBC article, per the plan, the total investments would be limited to $20 billion per year.

What This Means for South Korea’s Economy

South Korea, one of Asia’s most attractive markets, is facing heightened uncertainty amid the recent conflict in the Middle East. Geopolitical tensions in the region pose a risk to the country’s investment outlook, as rising oil prices and the potential closure of the Strait of Hormuz raise concerns about short-term supply disruptions.

Kospi, South Korea’s benchmark index, has gained 4.36% over the past month and 1.68% over the past five days. Reflecting the country’s strong market momentum, the index has surged about 65.45% over the past six months and 32.16% year to date. However, since the onset of the Middle East conflict, the benchmark has experienced heightened volatility and uncertainty.

That said, the $350 billion investment pledge in exchange for more favorable tariff conditions could provide fresh support to the South Korean economy. Lower tariffs are expected to benefit exporters, particularly as the United States remains a key destination for goods from South Korea.

According to the Korea Times, data from the Korea Customs Service showed that exports to the United States climbed 69.9% to $4.2 billion, highlighting resilient demand despite the tariff policies implemented under the administration of Donald Trump.

Data from the Korea Customs Service also highlights strong momentum in South Korea’s exports. Per the abovementioned Korea Times article, exports surged 55.6% year over year in the first 10 days of this month, fueled by solid overseas demand for semiconductors, further strengthening the case for increased exposure to the Asian economy.

Accessing South Korea Through ETFs

The deal could provide South Korea with greater trade stability. At the same time, a potential easing of the Middle East conflict and the possible release of oil reserves by the International Energy Agency to stabilize global oil prices could act as additional tailwinds, suggesting that current headwinds may prove temporary.

Against this backdrop, investors with a long-term horizon may continue to find opportunities in South Korea-focused ETFs. Investors looking to gain exposure to South Korea’s markets may consider Franklin FTSE South Korea ETF FLKR and iShares MSCI South Korea ETF (EWY Quick QuoteEWY - Free Report) .

For a more diversified exposure to Asia’s economy, investors can consider First Trust Asia Pacific ex-Japan AlphaDEX Fund FPA, iShares Asia 50 ETF AIA and KraneShares MSCI Emerging Markets ex China Index ETF KEMX.

ETFs to Play U.S. Sectors Benefiting From Korea’s Investment Plan

Funds like Vanguard S&P 500 ETF (VOO Quick QuoteVOO - Free Report) ), the SPDR S&P 500 ETF Trust (SPY Quick QuoteSPY - Free Report) and iShares Core S&P 500 ETF (IVV Quick QuoteIVV - Free Report) ), which track the S&P 500, can be considered. Investors seeking diversified exposure across sectors within the U.S. market can also consider Invesco S&P 500 Equal Weight ETF (RSP Quick QuoteRSP - Free Report) , ALPS Equal Sector Weight ETF EQL and Invesco S&P 100 Equal Weight ETF (EQWL Quick QuoteEQWL - Free Report) .

U.S. Industrial ETFs

Among the industrial ETFs, investors can consider State Street Industrial Select Sector SPDR ETF (XLI Quick QuoteXLI - Free Report) and iShares U.S. Industrials ETF (IYJ Quick QuoteIYJ - Free Report) .

U.S. Semiconductor ETFs

VanEck Semiconductor ETF (SMH Quick QuoteSMH - Free Report) and State Street SPDR S&P Semiconductor ETF (XSD Quick QuoteXSD - Free Report) can be considered.

U.S. AI ETFs

iShares U.S. Technology ETF (IYW Quick QuoteIYW - Free Report) and Fidelity MSCI Information Technology Index ETF (FTEC Quick QuoteFTEC - Free Report) are also worth betting on.