Dealers work as electronic boards show real-time indexes on the benchmark KOSPI, the won-dollar exchange rate and the junior bourse Kosdaq at a dealing room of Hana Bank in central Seoul, Tuesday. Yonhap

The market valuation of listed companies in Korea dropped relative to their book value in 2024, despite the government's efforts to boost the stock market, according to data on Wednesday.

The data, released by the Korea Exchange (KRX), showed that the price-to-book ratio (PBR) of the benchmark KOSPI was at 0.84 in 2024.

A PBR below 1 means a company's market value is lower than its book value. Under such circumstances, the current stock price is less than the money it would get by selling all its assets at book price.

The previous year's PBR was the same as in 2022, when the metric was at its lowest level since compilation of relevant data began in 2002.

A total of 573 KOSPI-listed companies had PBRs lower than 1 last year, up from 520 in 2023.

Concerning the Kosdaq, the number of companies with PBRs lower than 1 increased from 540 to 776 over the 2023-24 period.

A market observer pointed out that the PBR for the KOSPI was higher at 0.94 even during the global financial crisis.

The serious nature of the Seoul market thus raises questions on the effectiveness of the Corporate Value-up Program.

Introduced in February 2024, the program aims to bolster corporate governance and improve shareholder returns of Korean firms in a bid to tackle the chronic undervaluation of Korean stocks compared to their global peers.

The program prompted foreign investors to net purchase 7.85 trillion won worth of Korean stocks in February, which more than doubled from 3.48 trillion won in January.

The surge in net purchases came as Korea was benchmarking Japan, which saw a bull market thanks to years of corporate governance reforms and other steps to encourage share buybacks, lower cross-holdings and increased dividends.

Foreign investors in Seoul, however, net sold the stocks mostly in the second half, including 7.92 trillion won in September, as the Corporate Value-up Program turned out to be insufficient to transform the market.

Additionally, the crushing defeat of the ruling People Power Party in the April general elections and the impeachment of President Yoon Suk Yeol in December hindered the progress of the program.

The KOSPI ended 2024 at 2,399.49 points, falling below expectations made in February that it would reach 2,850 points by the year-end.

Market observers said the departure of retail investors to the U.S. market in pursuit of profits added to the lower valuation of the Korean market.

The KOSPI finished 2024 by losing 9.7 percent from the previous year, whereas the Nasdaq gained 30 percent over the same time period.