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S. Korean shares remain undervalued among major economies

Stocks 13:39 May 04, 2021

SEOUL, May 4 (Yonhap) -- Shares listed on South Korea's main bourse are undervalued compared with their global peers despite a recent rise in their prices, data showed Tuesday.

The price-earnings ratio (PER) of stocks listed on the KOSPI market stood at 26 as of Monday, up from 18.7 a year earlier, according to the data from the Korea Exchange.

The PER, which serves as the yardstick for valuing a company, gauges its current share price relative to its earnings per share. The latest figure reflects their financial statements as of the fourth quarter of 2020.

The bourse operator said the average PER rose as listed firms' share prices grew faster than their earnings over the past year.

The market value of those listed companies spiked 67 percent in 2020 from a year earlier, with their net income increasing 19 percent.

Yet, the average PER of the local stock market is lower than the average reading of 30.4 for advanced markets but higher than the median number of 21.5 for emerging markets.

Comparable figures were 34 for the United States, 41.2 for France and 24.9 for Japan. China's PBR was 19.4, with that of India reaching 39.3.

The price-to-book value ratio (PBR) of South Korea's main bourse, calculated by dividing a stock's market cap by the book value, was also lower than that for major economies.

The KOSPI market's PBR, which measures whether it is overvalued or undervalued, rose to 1.3 from 0.8 over the cited period, but it was below the average PBR of 3.1 for advanced economies.

S. Korean shares remain undervalued among major economies - 1


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