South Korean corporate reforms hit rough patch as Samsung digs in

Some investors have argued that some conglomerates, particularly Samsung, should return more profits to shareholders.

SINGAPORE/SEOUL – Global investors are pressing South Korea’s biggest conglomerates to speed up corporate governance reforms, saying progress has been uneven, with gains in financials offset by resistance among large chaebol affiliates.

Despite a blistering rally in 2026, South Korea’s market remains one of the world’s cheapest.

The index is up 35% for the year even after a wrenching drawdown since the summer – at one point it had more than doubled – and after selling off it trades on a forward price-to-earnings ratio of about 3.85 times, compared to 17.64 times for MSCI World.

Samsung Electronics illustrates the persistent discount. It reported the biggest quarterly operating profit by any technology company in history in the third quarter, yet trades at 1.87 times book value, versus 7.8 for Micron, 29 for Nvidia and 44 for Apple’s.

Reforms aimed at attracting more overseas investors remain a work in progress, contributing to investor outflows from Seoul and raising concerns that the momentum behind South Korean President Lee Jae Myung’s drive to eliminate the so-called Korea Discount could stall.

“Banks, or financial holding companies, are moving as they planned according to their value-up plans,” said Namuh Rhee, chairman of the Korean Corporate Governance Forum in Seoul.

“That said, large-caps – mainly chaebol affiliates – are resisting the corporate governance reforms recently and their lobbying has picked up dramatically,” he added.

Some investors have argued that some conglomerates, particularly Samsung, should return more profits to shareholders, simplify their corporate structures and implement strategic changes or divest from underperforming subsidiaries.

Samsung Electronics board chairman Shin Je-yoon met investors overseas before October’s earnings announcement.

The meeting followed complaints about the company’s shareholder return policy from global investors including Capital Group, Artisan and Fidelity, a person briefed on the matter told Reuters.

Investors argued the returns were too modest and said they preferred share buybacks and cancellations to higher dividends, the person said. The meeting and details of the discussions are reported here for the first time.