Korea Exchange identifies 151 low PBR companies

The Korea Exchange (KRX) has announced its first list of 151 companies identified as having a low Price-to-Book Ratio (PBR). The list includes 96 companies from the KOSPI market and 55 from the KOSDAQ market. This initiative aims to address the undervaluation of the South Korean stock market by encouraging companies to improve shareholder value through measures such as increased dividends, share buybacks, and improved profitability.

Major companies included in the announcement are Emart, Lotte Shopping, Hyundai Steel, Lotte Chemical, and Hanwha Life. Starting February 2, these companies will be tagged with a “low PBR” label on various securities trading systems to increase reputational pressure.

While the policy seeks to mirror successful value-up initiatives seen in Japan, critics note several challenges. The system relies on voluntary disclosure without legal penalties, and some companies have submitted improvement plans that lack specific timelines or links to executive compensation. Additionally, experts suggest that using a single metric like PBR may be insufficient, as the causes of undervaluation vary widely between firms, ranging from poor profitability to governance issues.