As market swings intensify amid deepening concentration, more low-PBR stocks emerge, up 14 percentage points from three months ago

[Financial News] The number of undervalued stocks with a price-to-book ratio, or PBR, below 1 is steadily increasing. The trend appears to reflect a sharp recent correction, which has pushed PBRs lower as concentration in the domestic stock market deepens.
According to the Korea Exchange on the 28th, 1,520 of the 2,517 stocks listed on the KOSPI Composite Index and KOSDAQ as of the previous day had a PBR below 1. That means 60.39% of the market was trading at undervalued levels. Preferred shares, SPACs, and suspended stocks were excluded.
PBR is an indicator that shows how a stock is valued relative to its equity. In general, a PBR below 1 is interpreted as a sign that a company is undervalued, with its market capitalization falling short of its book net asset value.
At the end of April, the share of stocks with a PBR below 1 on the KOSPI Composite Index and KOSDAQ stood at 46.26%. That figure has jumped by 14.13 percentage points in three months. It is also higher than the levels seen in January (48.98%), February (47.98%), March (50.96%), May (52.22%), and last month (58.75%).
The market, which had been on a steep upward run earlier this year, has become highly volatile. At the same time, the concentration of gains in leading stocks such as Samsung Electronics and SK hynix has intensified, leaving more undervalued names behind. In a rising market, gains were led by semiconductors and did not spread to neglected stocks. In a falling market, most stocks declined together.
A financial investment industry official said, "Global markets, including the United States, are also seeing sharp corrections in semiconductor stocks, but other sectors are helping support the indices to some extent." The official added, "In the domestic market, however, concentration is severe and the pool of funds that can provide support is limited. As a result, when semiconductors fall, other sectors often weaken as well."
Brokerage analysts say market liquidity must improve for stocks to rebound. Lee Kyung-min, a researcher at Daishin Securities, said, "The recent plunge in the KOSPI appears to have been driven by mounting psychological pressure from concerns that the AI and semiconductor industries have passed their peak, as well as the military conflict between the United States and Iran." He added, "Investor sentiment is fragile, so even a small trigger could reverse the mood."
"The KOSPI's 12-month forward price-to-earnings ratio is 5.7 times, close to a historical low," he said. "A spring with strong elasticity rebounds sharply when compressed, and the KOSPI has been pushed down enough that I expect a flexible rebound."
Joain, a researcher at Samsung Securities, said, "The lack of a clear buying force is acting as a constraint on a KOSPI rebound." She added, "Retail investors absorbed foreign selling early in the market's decline, so their additional buying capacity is limited. In the midst of extreme volatility, the return of foreign and institutional buying also remains uncertain."
[email protected] Seo Min-ji Reporter