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

DART Decoded Editorial Desk

Independent analysis of Korean DART filings & KRX market data · May 25, 2026

Last updated: May 2026

The Korea Value-Up Program explained in its simplest form: a landmark regulatory and market initiative launched by South Korea's Financial Services Commission (FSC) in early 2024 to close the persistent gap between Korean corporate valuations and those of global peers — a discount so entrenched that market participants have dubbed it the "Korea Discount." Modeled partly on Japan's successful Stewardship Code reforms and the Tokyo Stock Exchange's 2023 price-to-book (PBR) improvement directive, the program asks listed Korean companies to voluntarily disclose concrete plans for improving shareholder returns, capital efficiency, and long-term earnings power. For foreign investors, understanding the Korea Value-Up Program is increasingly essential: participation rates, index inclusion criteria, and evolving FSC enforcement all shape which Korean equities stand to benefit most from sustained re-rating.

What Is the Korea Value-Up Program? An Overview for Global Investors

The Korea Value-Up Program is a voluntary corporate disclosure framework administered jointly by the FSC and the Korea Exchange (KRX). Its policy origins trace to the January 2024 FSC announcement under then-Chairman Kim Joo-hyun, with formal guidelines published in May 2024 and the inaugural KRX Value-Up Index launched in September 2024. The program is specifically designed to address Korea's chronically low price-to-book ratios: as of late 2023, roughly 60% of KOSPI-listed companies traded below a PBR of 1.0x, compared with approximately 30% for Tokyo Stock Exchange Prime Market constituents and fewer than 5% for S&P 500 members.

The philosophical underpinning borrows heavily from Japan's experience. After the Tokyo Stock Exchange issued its March 2023 directive requiring companies trading below book value to disclose improvement plans — and threatened delisting for persistent non-compliance — Japanese equity markets experienced a sustained re-rating, with the Nikkei 225 reaching a 34-year high by early 2024. Korean regulators observed this outcome closely and structured the Value-Up Program to generate similar momentum, while adapting it to Korea's distinct chaebol-dominated corporate landscape.

At its core, the Value-Up Program asks KOSPI and KOSDAQ-listed companies to voluntarily publish a "Corporate Value-Up Disclosure" on the KRX Market Information System (KIND platform). This disclosure must address four key dimensions:

Current valuation status — self-assessment of PBR, price-to-earnings (PER), return on equity (ROE), and cost of equity relative to sector peers.
Target metrics — specific, time-bound goals for closing the valuation gap (e.g., achieving ROE above cost of equity within three years).
Capital allocation plans — dividend policy enhancements, share buyback programs, or asset restructuring measures.
Progress monitoring — commitment to annual updates comparing actual versus targeted outcomes.

Crucially, unlike Japan's directive, the Korean program remains voluntary in its first phase, with no explicit delisting threat attached to non-participation. This design choice reflects FSC sensitivity to chaebol resistance and constitutional concerns around compelled disclosure. However, FSC guidance has repeatedly signaled that future phases may introduce stronger incentives, including preferential treatment in government procurement, regulatory fast-tracking, and potential index inclusion benefits.

Korea Value-Up Program: Participating Companies and Disclosure Trends

Participation ramped up steadily through 2024 and into 2025. By the end of 2024, approximately 230 listed companies had submitted Value-Up disclosures on the KIND platform, representing roughly 15% of all KOSPI and KOSDAQ-listed issuers. The pace accelerated in the first quarter of 2025 as the KRX Value-Up Index — and the ETFs tracking it — began attracting meaningful inflows, creating a reputational incentive for index inclusion.

Early participants spanned a wide range of sectors, though financial services and industrials led in absolute numbers, reflecting the fact that banks, insurers, and holding companies have historically traded at the most severe book-value discounts. Notable early disclosures came from:

KB Financial Group (KOSPI: 105560) — committed to raising ROE to 10% or above and increasing total shareholder return (TSR) through progressive dividends and buybacks.
Hyundai Motor Company (KOSPI: 005380) — outlined a multi-year plan to achieve a PBR of 1.0x or higher, anchored by a significant expansion of its dividend and a dedicated buyback authorization.
Samsung Life Insurance (KOSPI: 032830) — published ROE improvement targets tied to portfolio restructuring and reduced cross-shareholding with Samsung Electronics (KOSPI: 005930).
Korea Electric Power Corporation (KEPCO) (KOSPI: 015760) — an emblematic case of a state-linked enterprise joining the program, signaling government pressure on public enterprises to comply.

Notably, several large-cap technology and semiconductor names were initially slower to participate, arguing that their valuations already reflected competitive earnings power rather than structural governance discounts. Samsung Electronics, for instance, had not released a formal Value-Up disclosure as of mid-2025, though its announced buyback and dividend programs were cited as functionally consistent with Value-Up principles.

Metric	KOSPI Average (2023)	S&P 500 Average (2023)	TOPIX Average (2023)
Price-to-Book Ratio (PBR)	~0.9x	~4.2x	~1.4x
Return on Equity (ROE)	~7.5%	~18.0%	~9.5%
Dividend Payout Ratio	~25%	~35%	~35%
% of companies below 1.0x PBR	~60%	<5%	~30%

Sources: KRX, Bloomberg, Tokyo Stock Exchange. Figures are approximate and based on available index-level data.

The KRX Value-Up Index: Construction, Constituents, and Investment Access

The KRX Value-Up Index is the flagship investable benchmark created to give both domestic and foreign investors direct exposure to program participants that demonstrate credible shareholder return improvement. The index was officially launched on September 24, 2024, with an initial constituent count of 100 companies selected from KOSPI and KOSDAQ listings.

Index Construction Methodology

KRX applies a multi-factor screening process to determine index eligibility. Companies must generally satisfy the following criteria:

Have published a qualifying Value-Up disclosure on the KIND platform within a defined look-back window.
Meet minimum liquidity thresholds (average daily trading value and free-float market capitalization).
Demonstrate measurable improvement or credible forward targets on at least two of: PBR, ROE, total shareholder yield (dividends plus net buybacks as a percentage of market cap), or earnings per share (EPS) growth.
Pass a governance screen, including adequate board independence ratios as assessed under the Korea Corporate Governance Service (KCGS) rating framework.

The index is rebalanced semi-annually (typically in March and September) with a review mechanism to remove constituents that fail to update their disclosures or materially miss stated targets.

ETF and Fund Access for Foreign Investors

Several Korean asset managers launched ETFs tracking the KRX Value-Up Index shortly after its September 2024 debut. Products from Samsung Asset Management, Mirae Asset, KB Asset Management, and Korea Investment Management collectively attracted over KRW 1 trillion (approximately USD 730 million) in combined assets under management within the first six months of trading. Foreign investors can access these ETFs directly through brokerages with KRX market access (including Interactive Brokers, Moomoo Securities, and most major global prime brokers with a Korean sub-custodian arrangement) or indirectly through offshore-listed Korea equity ETFs that have begun incorporating Value-Up themes into their screening methodologies.

For investors seeking individual stock exposure rather than index-level access, the KIND platform's Value-Up disclosure search function allows screening by sector, disclosure date, and stated ROE target — a practical tool for building a fundamental research watchlist anchored to the Korea Value-Up Program framework.

Comparing Korea's Value-Up Program with Japan's Stewardship Reforms

Because Japan's experience is the clearest precedent, investors analyzing the Korea Value-Up Program explained in isolation risk missing important structural differences that affect the probability and timeline of a comparable re-rating.

Dimension	Japan (TSE Directive, 2023)	Korea (Value-Up Program, 2024)
Compliance model	Comply-or-explain (semi-mandatory)	Voluntary (Phase 1)
Enforcement mechanism	Public naming; potential delisting review	Disclosure-based incentives; index inclusion
Primary regulator	Tokyo Stock Exchange (TSE)	FSC + KRX
Cross-shareholding context	Historically high, actively unwinding	Chaebol circular shareholding still significant
Tax incentive introduced	No direct tax incentive linked	Proposed dividend income tax relief for compliant firms
Market response (Year 1)	Nikkei +28% in 2023	KOSPI broadly flat; Value-Up stocks outperformed by ~8-12% in 2024

The single most important structural difference is the chaebol circular shareholding problem. In Japan, cross-shareholdings — primarily between banks and industrial companies — were already under pressure from Basel III capital rules and activist shareholders. Korea's chaebol structure is more legally and politically entrenched, meaning that the true unlocking of book value through asset monetization or holding company discount elimination requires regulatory action beyond what the Value-Up Program currently mandates.

Practical Considerations for Foreign Investors in Value-Up Stocks

Tax Treatment

Foreign investors in Korean equities are subject to a withholding tax of 22% on dividends (including local surtax) absent a tax treaty. Korea maintains tax treaties with approximately 93 countries, with reduced rates commonly ranging from 10% to 15% for treaty-eligible investors. The Korean government proposed in 2024 a partial dividend income tax reduction for companies meeting Value-Up targets, though legislative passage remained subject to National Assembly approval. Investors should consult jurisdiction-specific treaty guidance and monitor legislative developments closely.

Currency Risk

All KOSPI and KOSDAQ stocks are denominated in Korean Won (KRW). The KRW/USD exchange rate has historically exhibited meaningful volatility, influenced by current account dynamics, semiconductor export cycles, and Bank of Korea monetary policy. Investors typically consider hedged and unhedged return scenarios when modeling total return from Korean equity positions.

Foreign Ownership Limits

Most Korean listed companies do not impose foreign ownership caps. Exceptions exist primarily in sectors deemed strategically sensitive: broadcasting, telecommunications (e.g., KT Corporation, KOSPI: 030200, is subject to a 49% foreign ownership ceiling), and certain defense-adjacent businesses. The KRX's Foreign Ownership Status page provides real-time foreign room data, which is relevant for large-cap positions where foreign room is near exhaustion.

Governance and Stewardship

The National Pension Service (NPS) of Korea — the country's largest institutional investor with assets exceeding KRW 1,000 trillion — has aligned its stewardship activities with Value-Up objectives, committing to vote against management proposals at companies that persistently underperform on capital efficiency metrics. This activist posture from the NPS introduces a meaningful additional pressure mechanism that did not exist in comparable form during Japan's early stewardship reforms.

Risks and Limitations of the Korea Value-Up Program

Voluntary participation ceiling: Without mandatory compliance, companies with entrenched controlling shareholders may simply opt out, limiting the program's breadth among precisely the issuers where governance improvements are most needed.
Disclosure quality variance: Early Value-Up disclosures varied significantly in specificity, with some companies publishing vague aspirational statements rather than quantified, time-bound targets. KRX has indicated it will tighten disclosure standards in subsequent guidance revisions.
Political and legislative risk: Proposed tax incentives for compliant firms require National Assembly approval, which has historically been uncertain given Korea's polarized political environment. Changes in FSC leadership may also affect enforcement intensity.
Macro headwinds: Korea's export-oriented economy is sensitive to global semiconductor demand cycles, China trade dynamics, and USD strength, all of which can dominate short-term equity price action regardless of Value-Up progress.
Chaebol structural complexity: Circular cross-shareholding and opaque holding company structures limit the speed at which even genuinely committed chaebol affiliates can rationalize capital structures without triggering inheritance tax complications for controlling families.
Index concentration risk: The KRX Value-Up Index's initial 100-constituent composition was relatively top-heavy in financials and large-cap industrials, creating sector concentration risks for passive investors.

FAQ: Korea Value-Up Program Explained for Foreign Investors

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

As of mid-2025, participation remains voluntary under Phase 1 of the program. Companies that do not participate face no formal regulatory penalty, though they may be excluded from the KRX Value-Up Index and associated ETF inflows, and may face heightened scrutiny from the National Pension Service in shareholder voting contexts. FSC has signaled that later phases may introduce stronger compliance incentives, potentially adopting a comply-or-explain model similar to Japan's.

How can foreign investors find out which companies have submitted Value-Up disclosures?

All qualifying disclosures are publicly accessible on the KRX Market Information System, known as the KIND platform (kind.krx.co.kr). The platform offers a dedicated Value-Up Disclosure search function filterable by company name, KRX code, disclosure date, and sector. Most disclosures are filed in Korean, though several large-cap companies with significant foreign investor bases have published bilingual English summaries alongside the mandatory Korean filing.

What is the KRX Value-Up Index ticker and how can it be tracked?

The KRX Value-Up Index carries the KRX designation KRX Value-Up and its constituent and performance data are published daily on the KRX website. Multiple domestic Korean ETFs tracking this index are listed on KOSPI; their individual KRX codes can be found via the KRX ETF search function. Global data providers including Bloomberg and Refinitiv carry index-level data under their respective local market index hierarchies for Korea.

How does the Korea Value-Up Program affect dividend income for foreign investors?

The program itself does not directly alter the statutory 22% dividend withholding tax applicable to non-treaty foreign investors. However, the proposed tax policy companion to the program — under legislative consideration as of 2025 — would reduce the effective corporate-level tax burden on dividend distributions by companies meeting Value-Up criteria, potentially enabling them to pay higher gross dividends at the same net cost to the company. Treaty-eligible investors would continue to benefit from reduced withholding rates under applicable bilateral agreements.

Is the Korea Value-Up Program the same as an ESG initiative?

The Value-Up Program is distinct from conventional ESG (Environmental, Social, and Governance) frameworks, though there is meaningful overlap with the governance (G) dimension. The program is primarily a valuation and capital efficiency initiative — focused on PBR, ROE, and shareholder return metrics — rather than a broader sustainability mandate. Some Korean asset managers and global ESG data providers have begun incorporating Value-Up disclosure status as a positive governance signal in their scoring models, creating indirect ESG relevance.

Bottom Line

The Korea Value-Up Program explained comprehensively is best understood as South Korea's most ambitious attempt yet to systematically dismantle the Korea Discount through market-driven governance reform, regulatory incentive design, and institutional investor pressure — drawing lessons from Japan's precedent while navigating Korea's distinctly complex chaebol ownership landscape. For foreign investors, the program creates a new and investable thematic lens: companies that make credible, quantified commitments to capital efficiency improvements represent a structurally different risk-reward profile than the broader KOSPI universe. Historical data from comparable reform cycles in Japan suggests that governance-driven re-ratings can be durable when backed by consistent disclosure, rising institutional engagement, and real shareholder return delivery — all of which the Korea Value-Up Program is designed to incentivize.

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