KOSPI Companies with Below 1x Price-to-Book Ratio Increase to 597, Up 30 in Year

According to Bizwatch and VIP Asset Management CEO Kim Min-guk, companies trading below their book value on South Korea's KOSPI index increased to 597 on July 21, up from 567 a year earlier, even as the KOSPI nearly doubled. The average KOSPI price-to-book ratio rose from 1.07x to 1.95x over the same period, yet the proportion of companies with valuations below book value expanded from 67.4% to 72%.

The persistent undervaluation reflects structural issues, partly linked to South Korea's inheritance tax system. Current tax law evaluates listed shares based on average prices in the two months before and after inheritance or transfer dates, creating incentives for majority shareholders to maintain lower stock prices to reduce succession costs. Speaking at a July 21 parliamentary forum on preventing stock price suppression, Kim argued that tax policy should set a floor valuation at 80% of net asset value to eliminate the incentive to artificially depress share prices.