Value-up Index expanded after investor backlash

KB, Hana, SK Telecom, KT and Hyundai Mobis added

By Lee Yeon-woo

Five stocks, which had previously triggered criticism for being excluded from the initial Value-up Index list, were added during an index reorganization on Monday. These stocks are KB Financial Group, Hana Financial Group, SK Telecom, KT, and Hyundai Mobis.

The Korea Exchange (KRX) announced the addition of these five companies to the Value-up Index. It had evaluated 43 firms that disclosed plans to enhance shareholder returns as of Dec. 6 but failed to be included in the first round. The changes will take effect this Friday.

No companies were removed from the index this time to prevent disruptions in exchange-traded products linked to it. The KRX stated that it had no plans to make further adjustments until the next regular revision in June 2025. As a result, the index will temporarily include over 100 companies, deviating from its original framework.

"The KRX and the industry are focusing their efforts on settling exchange-traded funds linked to the index," a KRX official said. "As we completed this year's special rebalancing, we expect to see progress on the development of related, follow-up indices next year."

The Value-up Index was first introduced in September as part of the Corporate Value-up Program — a government-led initiative to revitalize the "undervalued" Korean stock market by improving corporate governance and shareholder returns.

However, the initial list faced criticism from investors and the brokerage industry for what they described as "inconsistent stock selection criteria." Many were disappointed by the exclusion of stocks such as KB Financial Group and Hana Financial Group, while the inclusion of certain controversial companies — for example, those involved in management disputes — appeared to contradict the program's goals.

Following these concerns, the KRX held an emergency press meeting shortly after the announcement. At this time, it clarified that its primary goal was not to highlight undervalued or high-dividend companies, but to create a benchmark for firms with strong qualitative indicators. Still, it left the door open for revisions, which led to Monday's additions.

Although the reorganization was anticipated, the market reaction on Monday was subdued, likely dampened by political uncertainty following President Yoon Suk Yeol's impeachment on Saturday.

Stocks that were highly anticipated to be included, such as Hana Financial Group, KB Financial Group, fell 1.34 percent and 0.47 percent, respectively. KT and SK Telecom recorded modest gains of 3.57 percent and 0.35 percent, respectively. Hyundai Mobis declined 2.66 percent.

In a related announcement, the KRX stated that an additional 300 billion won ($208.8 million) will be raised from five securities-related institutions this week. The fund is followed by the first round of fundraising, which secured 200 billion won on Nov. 4.