Hanwha Investment & Securities warned on the 24th that stocks trading below their book value are being increasingly overlooked by the market, even as the policy pressure to address the problem has intensified since 2024.
The numbers tell a stark story. Of 583 stocks listed on Korea's stock exchange with a price-to-book ratio (PBR) below 0.5, only 224 — or 38% — have risen since the start of 2026 through 22nd June. During a comparable period in 2024, when the government first unveiled its so-called "Value-up Programme" to close the persistent gap between Korean companies' market and book values, 72% of equivalent stocks had gained — a difference of 34 percentage points.
Stocks with PBRs between 0.5 and 1.0 fared little better: only 33% have risen so far in 2026, compared with 48% over the same window in 2024.
What makes this underperformance puzzling is that the policy backdrop has, if anything, grown more demanding. The Financial Services Commission has announced plans to publish, from October this year, a sector-by-sector list of low-PBR companies and attach a conspicuous "low-PBR" label to their stock tickers — a deliberate naming-and-shaming mechanism designed to press management into action.
In the National Assembly, multiple bills amending the Capital Markets Act have been introduced that would compel listed companies with a PBR below 1.0 for two or more consecutive financial years to prepare and disclose a formal plan for improving their corporate value. Companies that fail to comply would face fines of up to 100 million won (roughly $70,000).
A separate bill on inheritance and gift taxes, sponsored by lawmaker Lee So-young, is widely expected to be incorporated into the government's forthcoming tax reform package in July. Its central provision would apply the valuation methodology used for unlisted shares to listed companies whose market capitalisation falls short of 80% of net asset value, with a floor set at 80% of that net asset value — a measure that would raise the effective tax cost of holding deeply discounted listed shares.
Eom Su-jin, an analyst at Hanwha Investment & Securities, argued that the neglect of low-PBR stocks had gone too far. "Even allowing for factors such as the concentration of investment flows into the semiconductor sector," she said, "the degree to which low-PBR stocks are being overlooked is excessive."