KB, Hana stocks decline after firms miss cut for value-up program

After the announcement of the Korea Value-up Index, excluded stocks like KB Financial and Hana Financial fell significantly, contrasting with gains from included companies such as Samsung and Hyundai.

Korea Exchange Chairman Jeong Eun-bo announces the Korea Value-up Index on Sept. 24. [YONHAP]

Stocks that narrowly missed the cut for the Korea Value-up Index, a government initiative pushing for better corporate governance in response to the depressed valuation of Korean stocks, have struggled following the roster's announcement on Tuesday evening.

Shares of KB Financial Group and Hana Financial Group, which were previously considered strong value-up candidates but ultimately excluded from the program, closed at 78,100 won, 4.76 percent down from the previous trading session and 57,700, down 3.19 percent respectively, on Wednesday.

The Korea Exchange unveiled the index's constituent companies and selection criteria on Sept. 24. The operator selected 100 stocks based on factors including market capitalization, profitability, shareholder return policies, price-to-book ratio and return on equity.

Industry leaders such as Samsung Electronics, Hyundai Motor and Celltrion were included, alongside financial firms such as Shinhan Financial Group, Mirae Asset Securities, DB HiTek and Woori Financial Group. The index also included 12 companies not part of the benchmark Kospi, such as Kyung Dong Navien and Cuckoo Homesys.

Securities experts have expressed a cautious outlook on the index's potential effects. Lee Kyung-min, a researcher at Daishin Securities, assessed the index's impact on the stock market as neutral.

“While it may benefit the included companies in the medium to long term if the index successfully changes the trend, the immediate impact won't be dramatic,” said Lee.

Update, Sept. 25: Added stock price as of market close.

BY YOON SEUNG-JIN [yoon.seungjin@joongang.co.kr]