Investors have welcomed the massive shareholder payouts planned by Samsung Electronics and SK Hynix, but many believe the companies need to do more to help close South Korea’s long standing valuation gap.
The artificial intelligence boom has generated strong cash flows for the country’s two biggest technology companies, increasing expectations among shareholders for higher returns. Together, their planned payouts are worth more than 130 trillion won, or about $97 billion, for 2026. Despite the huge amount, investor satisfaction remains limited.
The KOSPI index, where Samsung Electronics and SK Hynix together represent almost half of the weighting, is still around 26% below the record level reached in June. The cautious market response highlights the difficulties facing President Lee Jae Myung’s Value Up programme.
Introduced in 2024, the programme aims to address the so called Korea discount. South Korean shares have traditionally traded at lower valuations than many global markets due to concerns surrounding corporate governance, the use of company capital and shareholder rights.
Analysts say larger payouts from Samsung and SK Hynix alone are unlikely to remove these long standing concerns. Clarence Li, lead portfolio analyst at T. Rowe Price, said the valuation gap is partly structural and would require many more Korean companies to demonstrate lasting improvements.
South Korean shares have nevertheless performed strongly this year. The market has gained about 67%, supported by the AI boom and expectations of stronger corporate earnings. However, the KOSPI is valued at only 4.3 times projected 2027 earnings, compared with about 11 times for the broader Asia Pacific index, according to Goldman Sachs data.
The difference shows the scale of the challenge for South Korea as it tries to improve the value investors place on its companies. Investors remain uncertain about whether other businesses will adopt similar shareholder friendly policies.
Sammy Suzuki, head of emerging markets equities at AllianceBernstein, said the large gains recorded by Samsung and SK Hynix should not automatically be viewed as proof that the Value Up programme has succeeded.
He noted that the unusually large payouts are largely linked to the strong memory chip cycle and the resulting increase in cash generation. This means the payments may not necessarily indicate a permanent shift in how Korean companies approach returning capital to shareholders.
For investors, the central question therefore remains whether the current level of payouts will be enough to bring lasting change to South Korea’s corporate market.