A Mountainous Path for KOSPI... Still "Undervalued"

KOSPI Experiences Sharp Swings Amid Middle East Concerns
KOSPI Down 9% and KOSDAQ Down 10% This Month Alone
"Still Undervalued Compared to Major Economies," Say Many Analysts

As military tensions between the United States and Iran escalated again, the New York stock market closed down across the board, and on the 11th, the domestic KOSPI also started down more than 2%. At the dealing room of Hana Bank headquarters in Jung-gu, Seoul, an employee is monitoring the stock market and exchange rates. On that day, the KOSPI opened at 7,509.62, down 221.20 points (2.86%) from the previous trading day. Photo by Jo Yongjun, June 11, 2026

As the conflict between the United States and Iran intensifies, the Korean stock market is also experiencing negative effects. Despite the recent sharp fluctuations in the KOSPI, analysts suggest there is ample possibility for a rebound after the correction, as the market remains undervalued compared to major advanced economies in terms of valuation.

KOSPI Attempts Rebound After Opening Lower Amid Middle East Concerns

On June 11, the KOSPI opened at 7,509.62, down 2.86% from the previous trading day, but has since narrowed its decline and, as of 10:06 a.m., is trading at 7,659.68, down 0.45%. KOSDAQ started trading at 937.17, down 1.52%, but has reversed course and is now up 1.48% at 965.75. With the correction ongoing, the KOSPI has dropped by approximately 9% just this month, while the KOSDAQ has fallen by 10%.

Amid rising tensions in the Middle East, the U.S. stock market saw a significant decline overnight. The Dow Jones Industrial Average fell by 1.87%, and the Standard & Poor's (S&P) 500 Index dropped by 1.62%. The tech-heavy Nasdaq Composite Index recorded a decline of 1.98%. The Philadelphia Semiconductor Index also decreased by 3.57%.

The U.S. Central Command, which oversees U.S. military forces in the Middle East, announced on the morning of June 11, "We have launched additional defensive strikes on various targets in Iran." Iran responded by stating, "We will firmly resist any pressure or threats." As the conflict between the two sides intensified again, international oil prices and U.S. Treasury yields rose. Seo Sangyoung, a researcher at Mirae Asset Securities, explained, "Concerns over military conflict between the United States and Iran have caused the U.S. stock market to decline," and "the news of the clashes and the sharp rise in international oil prices have also weighed on the market."

In the Korean stock market, semiconductor companies successfully reversed early losses and turned positive. As of 10:10 a.m., SK hynix is trading at 2,134,000 won, up 4.20% from the previous trading day, and Samsung Electronics is trading at 304,500 won, up 0.66%. SK Square (up 2.03%), Samsung Electro-Mechanics (up 0.50%), and Hanmi Semiconductor (up 4.63%) are also showing gains. In contrast, non-semiconductor stocks such as Hyundai Motor (down 2.16%), LG Energy Solution (down 2.20%), Samsung Life Insurance (down 2.45%), and HD Hyundai Heavy Industries (down 1.56%) are weaker.

Foreign investors continued to be net sellers in the KOSPI, offloading around 800 billion won and marking 24 consecutive trading days of net selling. Institutions also recorded net selling of about 100 billion won, while individual investors countered with net buying of over 900 billion won.

KOSPI Still Undervalued... List of Low PBR Companies Likely to Be Released Soon

Although the KOSPI has been volatile recently, a global consulting firm has pointed out that it remains undervalued in terms of price-to-book ratio (PBR) compared to major advanced economies. The report also suggested that the Korean government should take note of Japan’s case, where various institutional measures were implemented to boost corporate value.

Boston Consulting Group (BCG) released a report titled "From Discount to Premium: Recommendations for Enhancing the Value of Korea’s Low PBR Companies" the previous day, stating, "For the domestic stock market to advance, companies themselves must improve capital efficiency and increase total shareholder return (TSR)." BCG noted that while the KOSPI has more than tripled in the past year, it is still undervalued compared to other countries. Based on this year’s earnings forecasts, the KOSPI PBR is 1.9 times, significantly lower than the United States (4.9 times), Taiwan (4.0 times), India (2.8 times), and even Europe (2.2 times).

BCG emphasized, "If the government's institutional changes and improved earnings in major sectors such as semiconductors, shipbuilding, and defense led to the first round of re-rating, it is now time for the remaining companies to take concrete actions to enhance capital efficiency and shareholder value, thereby driving the second round of re-rating." The firm added, "Companies must actively manage TSR." The reason is that, with the increase in individual investors and the rise of shareholder activism, failure to manage TSR could result not only in poor stock performance but also in direct threats to management control.

BCG cited Japan as a leading example of improving market fundamentals through successful TSR management. Over the past decade, the return on equity (ROE) for Korean companies has improved by only 0.4 percentage points, from 7.3% to 7.7%. In contrast, while Japan’s net profit growth rate was 4.7% during the same period, its ROE improved by 2.1 percentage points, from 8.7% to 10.8%.

Global private equity firm KKR also highlighted the undervaluation of the Korean stock market in its "2026 Second Half Outlook Report" released on June 11. KKR pointed out that although the Korean market is gaining attention, about 70% of listed companies are still trading below book value, with a PBR of less than 1.

The Korean Government Preparing Various Institutional Measures for Stock Market Reassessment

The Korean government and political circles are also preparing various institutional measures to improve the market structure. President Lee Jaemyung, at his first anniversary press conference on June 9, stated that the domestic stock market remains "undervalued" and announced plans to introduce institutional measures to improve its fundamentals.

A representative measure is the "Stock Price Suppression Prevention Act" (Inheritance and Gift Tax Act Amendment). This bill, proposed by Assemblywoman Lee Soyoung of the Democratic Party, aims to change the inheritance and gift tax assessment criteria for listed companies with a PBR below 0.8, from the current market price to a focus on the company’s actual assets and earnings value. This bill was introduced in response to concerns that, under the current system, the lower the stock price, the lower the inheritance tax burden for major shareholders, which discouraged them from seeking to improve corporate value.

The Financial Services Commission and Korea Exchange also plan to pressure listed companies with low stock prices relative to corporate value by releasing lists of low PBR companies. The Korea Exchange announced the previous day that it will amend the KOSPI Market Listing Regulations to establish a basis for selecting and disclosing low PBR companies. The exchange plans to designate as low PBR companies those that rank in the bottom 20% by sector for two consecutive half-years and to make their names public. This so-called "naming and shaming" policy aims to expose companies neglecting to enhance corporate value to the public, thereby prompting change.

This content was produced with the assistance of AI translation services.