Finance:Korea discount
The Korea discount (Korean: 코리아 디스카운트)[citation needed] is the phenomenon in South Korea where companies listed on the Korea Exchange are valued lower compared to their global counterparts due to various factors.[1][2][3] Factors include poor corporate governance and tensions with North Korea.[4]
Factors
Chaebols
The country's prominent chaebol structures give disproportionately low benefits to non-family stakeholders and have been cited as a discount factor.[5] However, empirical evidence shows that chaebols themselves have lower discounts that non-chaebols.[6]
Dividends
South Korea has riskier and lower dividend payouts compared to other advanced markets.[7]
Geopolitical risk
In March 2026, President Lee Jae Myung cited geopolitical risk exaggerated by political circles as a factor in the discount.[8]
Split listing
In April 2026, the Financial Services Commission announced that it would ban split listings (resulting from division spinoffs) to counter the discount.[9]
History
During his tenure, President Yoon Suk Yeol promised to alleviate the Korea discount. However, his 2024 declaration of martial law was seen as excaberating the factors related to the phenomenon.[10]
In June 2025, during the tenure of President Lee Jae Myung, the National Assembly twice amended the Commercial Act, which regulates public companies, so that company managers now have fiduciary duty to shareholders rather than just the companies alone. This meant a change of power from the families that dominate companies towards minority investors. The law also mandates electronic shareholder meetings and changes voting procedures.[11]
References
- ↑ Lim, Nicole (5 April 2024). "Why Is There a Korea Discount?" (in en-US). https://www.thornburg.com/article/why-is-there-a-korea-discount/.
- ↑ "What's the 'Korea discount' and why is it a problem?". 21 November 2024. https://www.straitstimes.com/business/economy/whats-the-korea-discount-and-why-is-it-a-problem.
- ↑ Raychaudhuri, Manishi (17 December 2024). "Don't expect 'Korea discount' to disappear". https://www.reuters.com/markets/dont-expect-korea-discount-disappear-raychaudhuri-2024-12-17/.
- ↑ Lee, Youkyung; Kang, Shinhye (19 November 2024). "What's the 'Korea Discount' and Why Is It a Problem?". Bloomberg News. https://www.bloomberg.com/news/articles/2024-11-19/korea-discount-what-is-it-and-how-does-it-affect-stock-valuations.
- ↑ Sanyal, Shreyashi (2024-02-27). "Why South Korea's Japan-style measures to boost its stock market may not work" (in en). https://www.cnbc.com/2024/02/28/why-south-koreas-japan-style-measures-to-boost-its-stock-market-may-not-work-.html.
- ↑ Ducret, Romain; Isakov, Dušan (2020-10-01). "The Korea discount and chaebols". Pacific-Basin Finance Journal 63. doi:10.1016/j.pacfin.2020.101396. ISSN 0927-538X. https://www.sciencedirect.com/science/article/pii/S0927538X1930722X.
- ↑ Jie, Lim Hui (2023-11-28). "The 'Korea discount': Value stock or value trap?" (in en). https://www.cnbc.com/2023/11/28/the-korea-discount-value-stock-or-value-trap.html.
- ↑ Da-gyum, Ji (2026-03-18). "Lee eyes market overhaul to turn 'Korea discount' into 'Korea premium'" (in en). https://www.koreaherald.com/article/10697257.
- ↑ Yonhap (2026-04-16). "Regulator seeks to ban 'split listing' from July" (in en). https://www.koreaherald.com/article/10718523.
- ↑ Banerjee, Ankur; Ranganathan, Vidya (4 December 2024). "Politics prove investors right on the 'Korea Discount'". Reuters. https://www.reuters.com/markets/asia/politics-prove-investors-right-korea-discount-2024-12-04/.
- ↑ "In South Korea a corporate-governance revolution is under way". The Economist. 23 October 2025. https://www.economist.com/business/2025/10/23/in-south-korea-a-corporate-governance-revolution-is-under-way.
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