ATMs of major banks are installed in Seoul, Oct. 20. Yonhap

KB Financial Group and Hana Financial Group, which were excluded from the Korea Value-up Index in September, are set to be added to the list on Friday, raising expectations about whether investor sentiment will recover.

Despite the announcement regarding their inclusion, both companies' stocks declined and closed lower on Tuesday amid the fallout from President Yoon Suk Yeol's martial law declaration on Dec. 3. However, their stocks showed a modest upward trend on Wednesday.

The Korea Exchange (KRX) conducted the index reorganization and added five stocks, including KB and Hana, increasing the total number of stocks in the Korea Value-up Index from 100 to 105.

In September, the two financial companies failed to make it into the index, sparking controversy. KRX at the time said that KB was excluded due to falling short of the return on equity requirement, while Hana did not meet the price-to-book ratio criteria.

Financial stocks were considered beneficiaries of the government-led Corporate Value-up Program initiative, with their stock prices soaring, but they have recently fallen in the aftermath of martial law.

Despite political uncertainty being alleviated partially following the National Assembly's passage of an impeachment motion against Yoon on Saturday, foreign investors' selling pressure has targeted these stocks amid concerns that the impeachment crisis could weaken the momentum of the Value-up policy.

From Dec. 4 — the day after Yoon's martial law declaration — to Tuesday, foreign investors net sold KB, Shinhan Financial Group and Hana stocks at amounts of 459 billion won ($319 million), 195.3 billion won and 91.3 billion won, respectively.

As a result, KB's stocks have dropped by 16.6 percent during the same period, followed by Shinhan by 13.74 percent and Hana by 11.67 percent. Woori Financial Group has also seen its stocks decline by 11.4 percent.

Despite the inclusion in the Value-up Index, KB and Hana closed down by 0.24 percent and 1.02 percent, respectively, on Tuesday compared to the previous day.

Concerns are still abounding that the ongoing impeachment crisis, with the exchange rate remaining in the 1,430 won per dollar range, will continue to put pressure on shareholder returns.

Experts, however, predict that a rebound in financial stocks could be possible if the won-dollar exchange rate stabilizes.

"Concerns about potential regulatory expansion due to changes in the political environment, the high exchange rate situation and continued foreign sell-offs make it difficult to improve investor sentiment," Choi Jeong-wook, a researcher at Hana Securities, said.

"Nevertheless, if the stabilization of the exchange rate follows the resolution of political uncertainty, a short-term rebound could be likely."

On Wednesday, KB and Hana's stock prices closed up by 3.32 percent and 2.57 percent, respectively.

The KOSPI closed up by 1.12 percent.