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Several stocks in the banking and telecom sectors that were considered strong candidates for inclusion in the Corporate Value-up Index declined Wednesday after failing to make the list.

The Korea Exchange announced the list of 100 companies included in the Corporate Value-up Index the day before. The index is part of government-led initiatives to revamp the stagnated stock market by improving corporate governance.

Initially, most banking stocks were expected to be included, given the industry's active value-up announcements. However, only Shinhan Financial Group and Woori Financial Group were selected.

As a result, the stock prices of Hana and KB, which were left out, ended Wednesday at 57,700 won ($43.36) and 78,100 won, a decrease of 3.19 percent and 4.76 percent compared to the previous trading day.

"The main reason the results differed from expectations was the failure to meet the price-to-book ratio (PBR) requirement," NH Investment & Securities analyst Jeong Jun-sup said. "Only 10 stocks from the financial and real estate sector were included in the index. To be selected, the average PBR over the past two years needed to be within the top 50 percent of the sector."

Similarly, some telecommunication stocks, including KT and SK Telecom, also failed to make the list. Market observers had expected telecom stocks, which traditionally offer high-dividends, to be included. But they fell short based on return on equity criteria.

KT and SK Telecom shares closed at 40,500 won and 57,100 won, respectively, down 2.17 percent and 1.38 percent from the previous day.

"The stocks that were not included this time need to adopt more aggressive shareholder return policies than before, along with value-up announcements that meet market expectations, to improve their low PBR," Jeong said. "To enhance this figure quickly, the scale of stock buybacks and cancellations needs to be expanded beyond previous levels."