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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Seoul, May 8, 2025 — South Korea's equity market continues to trade at a discount from a global investment perspective, with key valuation metrics for KOSPI-listed companies trailing both developed and emerging market averages.
According to data released by the Korea Exchange (KRX) on May 8, based on full-year 2024 financial statements and closing prices as of May 2, the KOSPI's price-to-earnings ratio (PER) stood at 12.7x, while its price-to-book ratio (PBR) was 0.9x. This marks a decline from the previous year’s figures of 20.7x for PER and 1.0x for PBR.
These metrics are significantly below global averages. The average PER of developed markets is 21.3x, and that of emerging markets is 15.2x. For the KOSPI200 index, the undervaluation is even more pronounced, with a PER of just 11.0x.
The PBR story mirrors this trend. The KOSPI200’s PBR is only 0.8x—well below developed markets (3.5x) and emerging markets (1.8x). Compared to major global economies, the disparity is stark: the U.S. has a PBR of 4.8x, India 4.0x, Taiwan 2.6x, and Japan 1.5x. A PBR below 1.0 generally indicates that the market values a company below its book value, suggesting deep undervaluation.
This persistent undervaluation comes despite a sharp recovery in corporate earnings. KOSPI-listed companies recorded a combined net income attributable to controlling interests of KRW 160 trillion in 2024, a 57.7% increase year-over-year. However, the total market capitalization declined 3.5% over the same period to KRW 2,022 trillion.
Dividend yields showed modest improvement. The overall KOSPI dividend yield rose to 2.2% from 1.9% a year earlier, with the KOSPI200 recording a yield of 2.4%. This is higher than the developed market average of 1.9%, but slightly below the emerging market average of 2.8%. The Korea Exchange attributed this to the government’s “Value-Up” initiative, which helped boost total dividend payouts by 11.9% year-over-year to KRW 44 trillion.
Analysts attribute the undervaluation to a combination of factors, including corporate governance concerns, low capital efficiency, reduced foreign investor participation, and ongoing geopolitical risks. While policy and corporate-led efforts to improve valuation are underway, the KRX cautioned that it may take time for these changes to be fully reflected in stock prices.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
