As of July 27, 60.39% of stocks listed on South Korea's KOSPI and KOSDAQ markets traded below a price-to-book ratio (PBR) of 1x, according to Korea Exchange data. This represents 1,520 out of 2,517 total stocks excluding preferred shares, SPACs, and suspended issues. The proportion of undervalued stocks surged 14.13 percentage points from 46.26% in April, driven by intensified market concentration around semiconductor leaders Samsung Electronics and SK Hynix and recent sharp market corrections. The July 27 figure exceeds levels recorded in January (48.98%), February (47.98%), March (50.96%), May (52.22%), and June (58.75%), marking the highest concentration of low-PBR stocks in the tracked period. A PBR below 1x indicates a stock's market capitalization trades below its net asset value on company books, typically interpreted as undervaluation. The trend reflects a bifurcated market where gains concentrated in chip stocks during rallies failed to lift broader equities, while sell-offs dragged down most sectors simultaneously.
Low-PBR Stock Ratio Climbs 14 Percentage Points Since April
The Korea Exchange data shows a steady monthly increase in the proportion of stocks trading below 1x PBR throughout the tracked period. In January, 48.98% of KOSPI and KOSDAQ stocks fell into this category, followed by 47.98% in February, 50.96% in March, 52.22% in May, and 58.75% in June. The July 27 reading of 60.39% represents the highest level in this seven-month sequence. The 14.13 percentage point jump from April's 46.26% baseline marks the sharpest increase within the period. The calculation excludes preferred shares, special purpose acquisition companies (SPACs), and trading-halted stocks to focus on actively traded common equity.
Semiconductor Concentration Drives Sector Divergence
Market participants attribute the growing undervaluation to extreme concentration in semiconductor stocks during the year's earlier rally phase. A financial investment industry official stated that while global markets including the United States saw chip stocks correct recently, other sectors provided support to maintain index levels. The official noted that South Korea's market exhibits severe concentration with limited capital available to support non-leading sectors, causing semiconductor declines to trigger simultaneous weakness across other industries. During upward moves, the semiconductor-led rally failed to spread gains to neglected stocks, while downturns affected most equities indiscriminately. Samsung Electronics and SK Hynix were specifically cited as the dominant stocks around which market activity concentrated.
Analysts Cite Liquidity Recovery as Rebound Prerequisite
Lee Kyung-min, a researcher at Daishin Securities, attributed the recent KOSPI decline to compounding concerns over artificial intelligence and semiconductor industry peak-out timing combined with U.S.-Iran military tensions, which intensified psychological pressure on investors. Lee stated that given the fragile investment sentiment, small triggers could reverse the mood. Lee noted the KOSPI's 12-month forward price-to-earnings ratio (PER) stands at 5.7x, approaching historical lows, and expressed expectation for an elastic rebound analogous to a compressed spring releasing upward force. Jo A-in, a researcher at Samsung Securities, identified the absence of clear buying entities as a constraining factor for KOSPI recovery. Jo noted that individual investors absorbed foreign selling at the start of the decline, limiting their capacity for additional purchases, while the return of foreign and institutional buying remains uncertain amid extreme volatility.
FAQ
What percentage of Korean stocks traded below book value on July 27?
60.39% of KOSPI and KOSDAQ stocks (1,520 out of 2,517 total) traded below a price-to-book ratio of 1x as of July 27, according to Korea Exchange data excluding preferred shares, SPACs, and suspended issues.
How much did the low-PBR stock ratio increase since April?
The proportion of stocks trading below 1x PBR rose 14.13 percentage points from 46.26% in April to 60.39% on July 27, marking the highest level in the seven-month tracking period that began in January.
Why did Korean stock market concentration intensify around semiconductor stocks?
Market concentration around Samsung Electronics and SK Hynix prevented gains from spreading to other sectors during rallies, while limited supporting capital caused semiconductor declines to trigger simultaneous weakness across most industries, according to a financial investment industry official quoted in the source.
