South Korean auto giant Hyundai Motor ranks third in global car sales, trailing only Japan’s Toyota and Germany’s Volkswagen. However, in market capitalization, it lags far behind, ranking 16th according to CompaniesMarketCap, with Tesla (United States), Toyota, and Xiaomi (China) in the top three.
Samsung Electronics faces a similar disparity. Despite leading in global semiconductor revenue and smartphone market share, its market cap ranks fifth in semiconductors and 16th in tech. SK Hynix, the global leader in high-bandwidth memory (HBM), ranks 17th in semiconductor market cap and 58th in tech. This is due to persistent undervaluation of Korean markets, known as the “Korea discount,” which has intensified this year, with the KOSPI falling 9.6% while global markets trended upward.
Being listed on the Korean stock market itself is considered a discount factor. Cheon Joon-bum, CEO of Wise Forest, said, “To foreign investors, Korea is a country lacking policy consistency. They view the Korean stock market as opaque, unprincipled, and highly uncertain.” A securities firm executive noted, “If SK Hynix were listed on NASDAQ, it could have reached a trillion-dollar market cap when NVIDIA exceeded $3 trillion.” Coupang, listed on the New York Stock Exchange, has a market cap of $40.5 billion, surpassing Hyundai’s 44 trillion won.
Owner-centric corporate governance is also cited as a major reason behind the Korea discount. “In the Asian Corporate Governance Association (ACGA) evaluation, Korea ranked eighth out of 12 Asian nations,” said Rhee Nam-uh, chairman of the Korea Corporate Governance Forum, adding, “Under Korea’s governance structure, boards tend to remain loyal to controlling shareholders who helped appoint them, making it difficult to hold major shareholders accountable.”
Multiple listings and business divisions are also cited as discount factors. One stock investor commented, “If Apple were in the Korean market, it would probably be listed as 10 different companies, including Apple Music, Apple TV, App Store, etc.”
Experts attribute the undervaluation of Korean companies to investors’ low assessment of their future value. Stock prices reflect future potential, as demonstrated by Tesla, which has a market cap of $1.35 trillion despite posting a third-quarter operating profit of $2.717 billion.
Global stock analysis platform Simply Wall Street noted, “With a price-to-earnings ratio of 4.67, Hyundai Motor Company may be sending very bullish signals, but it is not wise to take the P/E at face value.” It explained that despite Hyundai’s strong earnings, the low P/E reflects investor concerns that the company’s performance “might be less impressive in the future.” While Hyundai shows promise in areas like autonomous driving and electric vehicles, it is difficult to predict a clear competitive edge over leading companies like Tesla and BYD.
Samsung Electronics, despite leading in semiconductors, smartphones, and appliances, is seen as having lower growth and profitability potential compared to software and service-focused companies. Lee Seung-woo, director of the research center at Eugene Investment & Securities, said, “The DRAM and NAND markets, where Samsung holds the top position, are expected to contract next year. Whether Samsung can demonstrate a transformative strategy will be a critical factor in its stock price performance.”
The relatively low global brand value of Korean companies also plays a role. A senior executive at a major conglomerate said, “Take KB Financial Group, for instance. It’s rare for non-Koreans to use it, unlike other global banks. This reflects the weak global brand recognition.”
