Korea's Value-Up Program: A Complete Guide for Foreign Investors

Last updated: April 2026

The Korea Value-Up Program is one of the most significant structural reforms to hit the Korean equity market in a generation. Launched by the Financial Services Commission (FSC) in 2024 and modelled in part on Japan's landmark Tokyo Stock Exchange governance push, the program compels listed Korean companies to confront persistently low price-to-book ratios, improve capital efficiency, and communicate a credible shareholder-return strategy to investors. For foreign investors who have long complained about the so-called "Korea discount," understanding the Korea Value-Up Program explained in its full regulatory, market, and practical context is essential before allocating capital to KOSPI or KOSDAQ-listed equities.

What Is the Korea Value-Up Program? An Overview

The Korea Value-Up Program is a voluntary, FSC-led initiative formally unveiled in February 2024 as part of a broader "Corporate Value-up" policy package. Its core premise is straightforward: too many blue-chip Korean companies trade below 1x book value — a ratio that would be unremarkable in Japan but is striking given Korea's world-class semiconductor, battery, and shipbuilding industries. The FSC identified structural causes including complex cross-shareholding webs, limited minority shareholder rights, thin dividend payout ratios relative to net income, and insufficient forward disclosure to foreign investors.

Drawing explicit inspiration from Japan's 2014 Stewardship Code and the 2023 Tokyo Stock Exchange directive requiring companies with a price-to-book (P/B) ratio below 1.0x to publish improvement plans, the FSC designed a framework where listed companies voluntarily disclose a formal "Value-Up Plan." These plans articulate measurable targets for return on equity (ROE), dividend policy, share buyback programs, and investor engagement calendars. Importantly, the FSC also consulted with the National Pension Service (NPS) — Korea's largest domestic institutional investor, with roughly KRW 1,000 trillion (approximately USD 740 billion) in assets — to incorporate stewardship expectations into the framework.

While participation is technically voluntary, regulatory signalling, index inclusion incentives, and NPS engagement create meaningful pressure on large-cap firms to comply. By late 2024, hundreds of companies had submitted Value-Up disclosures through the DART (Data Analysis, Retrieval and Transfer System) electronic filing platform, and the program's momentum continued to accelerate through 2025 and into 2026.

Korea Value-Up Program Explained: Key Mechanics and Filing Requirements

Understanding the mechanics is critical for investors who want to use DART filings to track corporate commitments. The program operates across three interconnected pillars:

1. Corporate Diagnosis and Disclosure

Participating companies must publish a formal Value-Up Plan through DART. The plan typically includes:

A self-diagnosis of the company's current P/B and P/E ratios relative to domestic and global peers.
An analysis of cost of equity (COE) versus return on equity (ROE), explicitly identifying whether the company destroys or creates value.
Specific, time-bound targets — for example, a commitment to achieve ROE above 10% within three years, or to maintain a dividend payout ratio of at least 30%.
A shareholder return roadmap detailing buyback schedules and dividend growth projections.

2. Ongoing Investor Relations Obligations

Companies that file a Value-Up Plan are expected to hold at least one dedicated Value-Up Investor Day per year, update their plan annually, and explain deviations from stated targets in subsequent filings. The FSC has signalled that persistent non-delivery will be flagged in stewardship reports and may affect NPS proxy voting decisions.

3. Tax and Regulatory Incentives

To sweeten participation, the Korean government introduced complementary tax measures in 2024 and refined them in 2025:

Corporate tax deductions for companies that increase dividends or execute buybacks in line with Value-Up targets, subject to qualifying thresholds.
Reduced dividend withholding tax for foreign investors receiving dividends from designated Value-Up companies — a reduction from the standard 22% (including local surtax) to a preferential rate, subject to bilateral tax treaty conditions.
ISA (Individual Savings Account) eligibility for Korean retail investors investing in Value-Up Index products, providing tax-sheltered exposure.

The KRX Value-Up Index: Structure, Constituents, and Benchmark Data

A tangible output of the Korea Value-Up Program is the KRX Korea Value-Up Index, launched by Korea Exchange (KRX) in September 2024. The index provides a rules-based benchmark for the program's intended beneficiaries and became the underlying index for a wave of exchange-traded funds (ETFs) listed on KOSPI.

Index Construction Methodology

The KRX Value-Up Index selects constituents using a multi-factor screen:

Profitability: Companies must demonstrate positive net income and ROE above the sector median over the trailing two fiscal years.
Valuation: A preference for companies with improving P/B trajectories, not necessarily those already above 1.0x.
Value-Up Disclosure: Companies that have formally submitted a Value-Up Plan on DART receive an eligibility advantage.
Shareholder Return: Dividend yield and buyback history are factored into the final ranking.

Index Feature	KRX Value-Up Index	KOSPI 200	MSCI Korea Index
Launch Date	September 2024	1994	1988
Number of Constituents (approx.)	100	200	~90
Primary Selection Criterion	ROE + Value-Up Disclosure	Market Capitalization	Market Cap + Investability
Rebalancing Frequency	Semi-annual	Semi-annual	Quarterly
Dividend Treatment	Price & Total Return variants	Price & Total Return variants	Price & Net Return variants
ETF Products Available	Yes (multiple, KOSPI-listed)	Yes (extensive)	Yes (extensive, global)

Several major asset managers — including Mirae Asset, Samsung Asset Management, and KB Asset Management — launched KRX Value-Up Index ETFs within weeks of the index's debut. Investors outside Korea can access Korea Value-Up exposure through Korean brokerage accounts, certain global platforms with KOSPI access, or through ADR/GDR instruments for individual constituents.

Notable Participating Companies and Sector Composition

Early Value-Up Plan filers spanned a broad cross-section of the Korean market, reflecting the program's economy-wide ambitions. Investors tracking the Korea Value-Up Program should focus on the following sectoral dynamics:

Financial Sector (Banks and Insurance)

Korea's major banking groups — including KB Financial Group (KOSPI: 105560), Shinhan Financial Group (KOSPI: 055550), Hana Financial Group (KOSPI: 086790), and Woori Financial Group (KOSPI: 316140) — were among the earliest and most enthusiastic adopters. This is partly self-interested: Korean bank stocks have traded at steep P/B discounts (often 0.3x–0.6x) for years despite stable ROE profiles of 8%–12%. Value-Up commitments from banks typically include target P/B ratios of 0.8x–1.0x within a defined timeline, meaningfully higher dividend payout ratios (moving toward 30%–40% of earnings), and systematic share cancellation programs tied to annual buyback completion.

Industrials and Conglomerates

Legacy conglomerates with complex holding structures — historically among the worst offenders on the Korea discount — have faced the most pressure. Hyundai Motor Group affiliates (Hyundai Motor KOSPI: 005380; Kia KOSPI: 000270) published detailed Value-Up disclosures linking capital return targets to free cash flow generation from their expanding electric vehicle lineup. Similarly, POSCO Holdings (KOSPI: 005490) outlined plans to enhance shareholder returns alongside its steel and battery materials transformation strategy.

Semiconductors and Technology

Samsung Electronics (KOSPI: 005930) and SK Hynix (KOSPI: 000660) drew enormous attention given their scale. Samsung Electronics in particular — which at times constitutes 20%–25% of the KOSPI's total market capitalization — announced a KRW 10 trillion special dividend in late 2024 and outlined a more systematic quarterly dividend structure, changes widely interpreted as aligned with Value-Up expectations. SK Hynix committed to a progressive dividend policy tied to memory cycle earnings, representing a notable shift from its historically conservative payout stance.

Comparing Korea's Value-Up Program to Japan's Governance Reform

The Korea Value-Up Program explained in isolation risks missing its most illuminating context: the Japanese precedent. Japan's TSE reform, which in March 2023 requested all Prime Market companies trading below 1x P/B to publish improvement plans, is widely credited with helping lift the TOPIX to multi-decade highs through 2023–2024. Foreign institutional flows into Japan surged as the reform gained credibility.

Dimension	Korea Value-Up Program	Japan TSE P/B Reform
Lead Regulator	Financial Services Commission (FSC)	Tokyo Stock Exchange (TSE)
Participation	Voluntary with strong incentives	Requested, effectively semi-mandatory
Disclosure Platform	DART (electronic filing system)	TSE disclosure portal
Institutional Enforcement	NPS stewardship, tax incentives	GPIF stewardship, TSE monitoring
Dedicated Benchmark Index	KRX Korea Value-Up Index (Sep 2024)	JPX Prime 150 Index (Jun 2023)
Short-Term Market Impact	Significant KOSPI rally in H1 2024	TOPIX multi-decade high in 2024
Key Structural Risk	Chaebol family control limiting reform depth	Cross-shareholding unwinding pace

A critical distinction investors typically note is that Korea's chaebol governance structures — where founding families often control massive conglomerates through relatively small equity stakes via layered holding companies — present a more entrenched obstacle than Japan's more diffuse cross-shareholding problem. However, generational transitions in ownership at several chaebol groups, combined with activist pressure and NPS engagement, have created political space for reform that was absent a decade ago.

Practical Considerations for Foreign Investors

Investors seeking exposure to the Korea Value-Up Program theme should consider the following practical factors:

Market Access: Foreign investors need a Korea Investment Registration Certificate (IRC) to trade directly on KOSPI and KOSDAQ. Most global prime brokers can facilitate this process, and execution typically occurs within one to two business days.
Withholding Tax: The standard Korean withholding tax on dividends is 22% (20% base rate plus 10% local income surtax). Tax treaty residents — including investors from the United States, United Kingdom, and most EU member states — may claim treaty rates typically ranging from 10% to 15%. Value-Up-linked preferential rates may provide additional relief for qualifying recipients; investors should confirm with a local tax adviser.
Currency Risk: All KOSPI-listed securities are denominated in Korean Won (KRW). The KRW/USD exchange rate is sensitive to global risk sentiment, Korean current account dynamics, and semiconductor cycle swings. Hedging instruments including KRW non-deliverable forwards (NDFs) are liquid and widely available through major FX desks.
ETF Access: For investors preferring diversified exposure, KRX Value-Up Index ETFs listed on KOSPI offer a convenient vehicle. These are accessible through Korean brokers and certain international platforms with KOSPI connectivity. Expense ratios for these products have been competitive, generally in the 0.15%–0.30% range.
DART Monitoring: Foreign investors can monitor Value-Up Plan filings directly on the DART platform (dart.fss.or.kr) free of charge. DART Decoded provides translated summaries and analysis of key filings to help non-Korean readers extract actionable data.

Key Risks and Limitations of the Korea Value-Up Program

Voluntarism creates uneven adoption. Because participation is not legally mandated, companies with entrenched controlling shareholders can technically decline to file a meaningful Value-Up Plan or file aspirational targets with little enforcement consequence.
Target quality varies widely. Early analysis of DART filings revealed significant dispersion in plan quality — some companies provided specific, auditable KPIs while others offered vague directional statements. Investors must read filings critically rather than treating disclosure itself as a proxy for commitment.
Macro headwinds can overwhelm micro reform. The KOSPI's trajectory is heavily influenced by global semiconductor demand cycles, geopolitical risks on the Korean peninsula, and USD/KRW dynamics. Even well-executing Value-Up companies can experience share price declines during adverse macro phases.
Chaebol governance reform is multi-decade, not multi-year. Structural changes to inheritance tax laws, holding company regulations, and minority shareholder rights require legislative action that proceeds at the pace of Korean politics. Investors should calibrate expectations accordingly.
Index concentration risk. The KRX Value-Up Index, like KOSPI broadly, carries significant concentration in financials and large-cap industrials. Diversification benefits relative to a KOSPI 200 tracker may be limited.
Regulatory continuity risk. Korea's FSC policy direction can shift with administrations. However, the NPS's institutionalised stewardship role provides some continuity independent of the political cycle.

FAQ

When did the Korea Value-Up Program officially launch?

The FSC formally introduced the Korea Value-Up Program framework in February 2024, with initial disclosure guidelines published in May 2024. The dedicated KRX Korea Value-Up Index launched in September 2024. The program has continued to evolve, with updated guidelines and tax incentive refinements announced through 2025.

Is participation in the Korea Value-Up Program mandatory for listed companies?

Technically, participation is voluntary. However, companies that choose not to file a Value-Up Plan face potential negative consequences including exclusion from the KRX Value-Up Index, adverse proxy voting by the NPS (Korea's largest institutional investor), and heightened scrutiny from domestic activist shareholders. In practice, the pressure on large-cap KOSPI companies to participate is substantial.

How can I access the KRX Value-Up Index as a foreign investor?

Foreign investors can gain exposure through KRX Value-Up Index ETFs listed on KOSPI, accessible via Korean brokerages or international platforms with KOSPI market access. Alternatively, investors can construct a portfolio of individual Value-Up Plan filers sourced from DART disclosures. Direct KOSPI trading requires a Korea Investment Registration Certificate (IRC), which most major global brokers can assist clients in obtaining.

How does the Korea Value-Up Program differ from ESG investing?

The Korea Value-Up Program is primarily a financial governance reform focused on capital efficiency, shareholder return, and valuation improvement — rather than environmental, social, or governance (ESG) criteria in the broad sense. While improved corporate governance is an element of ESG frameworks, a company can score well on Value-Up metrics without having strong environmental or social practices. Investors should treat the two frameworks as complementary but distinct.

What is the "Korea discount" and does Value-Up address it?

The "Korea discount" refers to the persistent tendency of Korean equities to trade at lower valuation multiples — particularly P/B and P/E — than comparable companies in developed markets such as the United States, Japan, or Germany. Causes include opaque chaebol governance, low dividend payouts, geopolitical risk, and limited foreign investor access historically. The Korea Value-Up Program directly targets the governance and capital return dimensions of this discount, though eliminating it entirely would require broader legislative and structural changes.

Bottom Line

The Korea Value-Up Program represents the most credible attempt in Korea's modern financial history to address the structural undervaluation of its equity market — and for foreign investors willing to navigate the nuances of DART filings, KRX index mechanics, and chaebol governance dynamics, it offers a compelling analytical lens for identifying companies undergoing genuine capital allocation transformation. With the KRX Korea Value-Up Index now providing a rules-based benchmark, dedicated ETF products multiplying, and institutional pressure from the NPS reinforcing corporate commitments, the Korea Value-Up Program explained comprehensively is no longer optional knowledge — it is foundational for any serious global investor in Korean equities.

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