A List Entered by Price Cannot Be Left by Filing — Not Where the Price Has Lasted Six Years

By R-Advisory, IRP-R

Two exchanges have decided that one way to move corporate valuation is to publish a list. The lists ask about the same thing — whether a company's market price reflects the capital it employs — and they were updated six days apart. They are not the same instrument. The difference is in who supplies the condition for being on them.

On 27 October the Tokyo Stock Exchange updated its list of companies that have disclosed "Action to Implement Management that is Conscious of Cost of Capital and Stock Price," reflecting status as of 30 September. The published file carries 2,341 companies: 2,293 marked "Disclosed" and 48 "Under consideration," 1,455 of them in the Prime Market and 886 in Standard. The document states its own purpose — it compiles companies that have disclosed information "to inform investors of who is taking action." Membership is determined by the option a company selected under "Content of Disclosure" in its most recently submitted Corporate Governance Report, and a company that has done nothing does not appear at all. The list is a roll of filers.

On 1 November the Korea Exchange published its first low-PBR list, effective 2 November and running to 3 May 2027. It holds 151 companies: 96 on the KOSPI side, 55 on KOSDAQ. The population was 2,431 companies priced as of 22 October — 779 KOSPI, 1,652 KOSDAQ — after excluding companies with delisting grounds. The criterion is three-year cumulative price-to-book within market and industry, in the bottom 25% on KOSPI or the bottom 10% on KOSDAQ, met for six consecutive half-years or for six of the last seven. 185 companies met it. Lotte Shopping, Lotte Chemical, E-Mart, Hyundai Steel, Hanwha Life and Taekwang Industrial are on the KOSPI side; KCC E&C, Dongwon Development and TK Chemical on the KOSDAQ side. Nothing in that test is supplied by the company. The list is a roll of prices.

Seoul then attached one door that a document opens. A company that disclosed a corporate value-up plan containing a PBR improvement plan by 22 October comes off the list. 62 companies filed by that date. 34 were removed — 19 on KOSPI, 15 on KOSDAQ — taking 185 down to 151. The other 28 filed and got nothing from it: 15 because their low PBR had already run twelve half-years, six years, and 13 because they had never met the selection criteria in the first place. One filing, three outcomes. And the group for which the filing did nothing is the group that has been at the bottom of its industry longest.

The figures reproduce from the published numbers. 779 plus 1,652 is 2,431. 115 plus 70 is 185. 19 plus 15 is 34, and 185 minus 34 is 151, which is also 96 plus 55. 34 plus 15 plus 13 is 62. The nominal threshold and the realised rate are also not the same thing: the KOSPI rule names the bottom 25% of an industry, but 115 of 779 companies — 14.8% — actually qualified; the KOSDAQ rule names the bottom 10%, and 70 of 1,652 — 4.2% — qualified. What set the size of the list was not the quantile but the persistence requirement sitting behind it. Among the 151, average price-to-book is 0.247 (0.24 on KOSPI, 0.25 on KOSDAQ) against market-wide readings of 1.43 and 1.60 on 30 October; 113 of the 151, or 74.8%, stand at 0.3 or below, and the median is 0.23.

What this comparison does not establish. It does not say which design works. Neither exchange has published an outcome measure, and the Korean list has existed for one day. It does not say the 15 are worse companies than the 34: the rule that separates them counts elapsed half-years, not conduct. It says nothing about the valuation of any individual company named above. And the Tokyo roll is not a measure of disclosure quality — "Disclosed" records that an option was selected, not what stood behind it, and "Under consideration" expires after six months whether or not anything follows.

Two things an individual investor can check directly. First, on KIND's value-up page, whether a given company appears on the low-PBR list and whether a corporate value-up plan is on file for it. Both facts sit in the same system, and the pair tells you which of the three outcomes that company landed in. Second, inside a plan that is on file, whether the PBR improvement section states a target value and a date — because the exemption attaches to the presence of that section, not to what it contains.

The instrument is not the count of names. It is whether a company had to file anything to appear — and, where a filing can remove it, how long the condition must have lasted before the filing stops working.

General observation from public filings. Not investment advice. This article is for information only and is not investment advice or a solicitation to buy or sell any security.

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