Korea Discount and the Value-up Program, Explained Simply

The “Korea discount” is the long-standing observation that Korean listed companies trade at lower valuations than similar companies elsewhere: investors pay less for each won of a Korean company’s net assets or profit. The Corporate Value-up Program is the government’s main response. The Financial Services Commission (FSC) announced it on February 26, 2024, asking listed companies to publish plans to raise their value and their returns to shareholders. Since then, lawmakers have also changed company law and the tax on dividends.

Totals for 2025 are converted at 1,439.0 won per dollar, the 15:30 Korea time close on December 30, 2025, the last trading day of that year. Other won amounts use 1,338.3 won per dollar, the close on October 14, 2026 (Bank of Korea, ECOS).

What does “Korea discount” actually measure?

The usual yardstick is the price-to-book ratio (P/B): the share price divided by net assets per share. The price-to-earnings ratio (P/E) is also used.

The Korea Exchange (KRX), citing Bloomberg data for the MSCI Korea index, put its P/B at 0.88 at the end of 2024 and 1.59 at the end of 2025, against a ten-year average of 1.09. Its P/E rose from 11.37 to 17.47. In its review of January 8, 2026, KRX said the Korea discount was easing.

MSCI’s own factsheet gives a newer snapshot, as of September 30, 2026:

Index	P/B	P/E	Dividend yield
MSCI Korea	2.29	10.25	0.81%
MSCI Emerging Markets	2.39	14.90	2.02%
MSCI ACWI IMI (global)	3.43	21.55	1.63%

Two cautions. On that date Samsung Electronics made up 35.31% of MSCI Korea and SK hynix 27.58%, so the ratios mostly reflect two chipmakers’ prices and profits. And Bloomberg, MSCI and KRX calculate ratios differently, so compare figures from the same source and date.

Why do Korean shares trade at lower valuations?

The FSC said in February 2024 that the discount is “an outcome of multiple factors coming to play in combination”. The explanations heard most often:

• Family-run groups and governance. Many of Korea’s largest companies belong to chaebol, business groups controlled by founding families. The Ministry of Justice, announcing the July 2025 Commercial Act changes, called opaque governance a main cause of the discount. The Korea Fair Trade Commission limits cross-shareholding and circular shareholding within large groups, citing the risk of excessive concentration of economic power.
• Treatment of minority shareholders. Robeco, a Dutch asset manager, wrote in February 2024 that family-centered governance raises concerns that outside shareholders lose out.
• Low payouts. Robeco also cited a 2023 Korea Capital Market Institute study pointing to low dividends and buybacks, low return on equity and limited growth. MSCI Korea’s 0.81% dividend yield is well below the emerging-market figure, though yields also fall when prices rise quickly.
• Geopolitical risk. Robeco called it the “frequently cited reason” but was skeptical, noting that Taiwan, also seen as militarily exposed, does not carry the same discount.
• Market access. MSCI still classifies Korea as an emerging market. Its June 23, 2026 review said the won “is not deliverable offshore” and that omnibus accounts and in-kind transfers are still little used. See our guide to Korea and MSCI developed-market status.

What is the Corporate Value-up Program?

A set of voluntary measures run by the FSC and KRX:

• February 26, 2024: the FSC announces the scheme. Companies are asked to disclose medium- to long-term plans to raise their value, with the board involved. There is no deadline and no penalty for not filing.
• May 2, 2024: draft guidelines are published. The FSC said KRX rules that shield forecasts from penalties for missed targets would cover the plans.
• May 2024: companies start filing plans through KRX’s disclosure system, KIND.
• September 24, 2024: KRX announces the Korea Value-up Index: 100 stocks, 67 from the KOSPI and 33 from the KOSDAQ, calculated in real time from September 30. Stocks are screened on size, profits, shareholder returns, P/B and return on equity. No stock can exceed 15% of the index.
• June 2025 and June 2026: yearly index reviews favor companies that have filed plans.

Take-up was slow, then jumped. KRX counted 171 companies with plans at the end of 2025, covering 44.5% of total market value. By the end of May 2026 there were 731 (343 on the KOSPI, 388 on the KOSDAQ), covering 83.1%. Most of the jump came from 628 “high-dividend companies” filing under a new tax rule, explained below.

KRX also reports that in 2025 listed companies bought back 20.1 trillion won of their own shares (about US$14.0 billion), canceled 21.4 trillion won (about US$14.9 billion) and paid 50.9 trillion won (about US$35.4 billion) in cash dividends. Cancellations were about four and a half times the 2023 figure, and dividends 18% higher. KRX credits a more shareholder-friendly culture; the figures alone cannot separate the scheme’s effect from higher profits.

What changed in company law and dividend tax in 2025 and 2026?

The Commercial Act was amended three times, according to the Ministry of Justice and the national law database:

1. Act No. 20991, promulgated July 22, 2025. Directors’ duty of loyalty now runs to shareholders as well as the company, and directors must treat all shareholders fairly. This took effect at once. Since July 23, 2026, at least a third of a listed company’s board must be “independent directors”, and a tighter 3% voting cap applies to the largest shareholder when audit committee members are appointed.
2. Act No. 21044, promulgated September 9, 2025, in force September 10, 2026. Listed companies with assets of 2 trillion won (about US$1.49 billion) or more can no longer opt out of cumulative voting, which lets shareholders put all their votes on one board candidate. Separately elected audit committee members rise from one to two.
3. Act No. 21448, promulgated and in force March 6, 2026. Companies must in principle cancel bought-back shares within a year. Keeping them, for example for staff pay, needs a plan approved by shareholders. Shares bought earlier have 18 months, according to the FSC.

Dividend tax changed too. Since January 1, 2026, dividends from qualifying “high-dividend companies” can be taxed separately at 14% to 30% before local tax, instead of being added to other income and taxed at up to 45%, according to the National Tax Service. The Korea Times reported the bands as 14% up to 20 million won (about US$14,900), 20% up to 300 million won (about US$224,000), 25% up to 5 billion won (about US$3.74 million) and 30% above, and said companies qualify with a payout ratio of 40%, or 25% with dividends up at least 10% on the year. The final law, amended December 23, 2025, also requires that dividends not fall below their 2024 level. Since February 2026, companies must show they qualify in a value-up plan filed with KRX.

These rules are for Korean taxpayers: the law gives the dividend tax break only to Korean residents. Investors abroad usually pay Korean withholding tax on dividends at a rate set by their country’s tax treaty.

What is still debated?

• Will boards change? Eight business groups said on July 3, 2025 that the first amendment raised the risk of “speculative forces” entering the market, and asked for clearer protection for directors’ business judgment, according to the Korea JoongAng Daily. Yi June-suh, a Dongguk University professor in the same report, said the change aims to fix a distortion that favored controlling shareholders.
• Is the discount closing? KRX points to higher P/B ratios, but with two chipmakers so large in the index, the ratios cannot separate reforms from the memory-chip cycle.
• Is voluntary enough? Plans still carry no penalty for missed targets, and filing became common only once a tax break depended on it.

Where can you follow it?

KRX publishes a monthly value-up report and each company’s plan on KIND (kind.krx.co.kr).

The weight of Samsung Electronics and SK hynix also helps explain why the KOSPI is so volatile. For daily flows, see how foreign investors move the KOSPI, and the market map shows how the KOSPI 200 and KOSDAQ 150 moved over the last trading day and up to 120 sessions.