Value-up Program 2.0: Re-emphasis on Government Policy and the Collective Rise of Low P/B Stocks

Evolution of the Corporate Value-up Program in Its Third Year

In the second half of 2026, the 'Corporate Value-up Program' is undoubtedly the core focus of the Korean stock market. Entering the third year since its introduction, the government and financial authorities are strongly pushing for 'Value-up 2.0,' which shifts the focus from merely encouraging public disclosures to prioritizing practical implementation and tangible results. According to the Korea Exchange, as of the end of May 2026, over 731 listed companies have published their corporate value enhancement plans, representing more than 80% of the total market capitalization.

This renewed emphasis by the government has drawn an immediate market reaction. In particular, stocks with persistently low Price-to-Book Ratios (P/B) are experiencing a strong collective rally, driving the KOSPI index upward. This article analyzes the major policy shifts in the Value-up 2.0 era and the corresponding capital inflows into low P/B stocks.

The Core of Value-up 2.0: From Voluntary Disclosure to Substantial Shareholder Returns

While the initial phase of the Value-up Program focused on voluntary participation and the publication of value enhancement plans, the current phase has entered a stage of verifying the 'execution capability' of these announced plans.

• Mandatory Disclosure for High-Dividend Companies: Following the amendment of the Enforcement Decree of the Restriction of Special Taxation Act in February 2026, high-dividend companies seeking tax benefits, such as separate taxation on dividend income, are now required to disclose their corporate value enhancement plans. This serves as a powerful incentive to increase the policy's effectiveness.
• Regular Evaluation of Implementation Status: The Korea Exchange tracks the actual execution of share buybacks and dividend increases subsequent to the initial disclosures, making the progress transparent through regular regulatory filings.
• Expanded Incentives for Exemplary Companies: Direct incentives for companies with excellent shareholder returns, such as increased weighting in the Korea Value-up Index and expanded corporate tax reductions, are driving capital reallocation in the market.

The Collective Rise of Low P/B Stocks and Capital Rotation

As the government's policy commitment is reaffirmed, capital from institutional and foreign investors is rapidly flowing into low P/B value stocks. Traditional undervalued sectors such as finance, holding companies, automobiles, and telecommunications are at the center of this trend.

1. Explosive Growth of the Value-up Index and Related ETFs

The 'Korea Value-up Index,' composed of companies with high actual shareholder return rates, has outperformed the KOSPI average by more than 15 percentage points in 2026. The Assets Under Management (AUM) of related Exchange Traded Funds (ETFs) have already surpassed 4 trillion KRW, demonstrating a strong influx of passive capital.

2. Spread of Momentum to Small and Mid-Cap Low P/B Stocks

The buying momentum, which was initially concentrated on large-cap holding and financial stocks, is gradually spreading to KOSDAQ and small-to-mid-cap value stocks. The government's announcement to strengthen customized Value-up consulting and incentive support for small and medium-sized enterprises (SMEs) served as a catalyst. A structural shift is occurring where companies that were previously neglected due to low trading volume, despite having high asset value, are being re-evaluated.

Future Market Outlook and Implications

The Corporate Value-up Program has established itself not merely as a short-term theme, but as a medium-to-long-term structural improvement process aimed at resolving the chronic 'Korea Discount.' For investors, it is essential to move beyond blindly chasing companies with low P/B ratios and instead focus on selecting companies with abundant Free Cash Flow (FCF) and clear shareholder return commitments verified through official disclosures.

The stock market in the second half of 2026 coincides with the global interest rate cut cycle. Amid a liquidity-driven market resulting from alleviated interest rate burdens, Value-up leading companies equipped with clear earnings visibility and shareholder-friendly policies are highly likely to sustain a medium-to-long-term rally as the new leading stocks of the Korean market.