The 2026 edition of the Organisation for Economic Cooperation and Development’s Asia Capital Markets report highlights some key flaws in the region, notably the number of companies trading below book value.
According to the report released in mid-June, excluding China and Japan, 39% of companies listed in Asia have a price-to-book ratio of below one, higher than the global average of 34%. The largest share of companies with a ratio of less than one are Singapore and Thailand, at 64% and 60%, respectively.
“Despite strong economic growth and the emergence of globally competitive firms, equity market outcomes across much of Asia have been relatively moderate…,” the report says, pointing also to lower shareholder returns and modest payout ratios.
Such figures should be deeply concerning for institutional investors looking to tap into Asian bourses through indexes, exchange-traded funds vehicles, and other products designed to track the entire local market.
Last year, the Asia Corporate Governance Association published a report which noted that Asian markets have delivered lacklustre returns and seen investors shift to overseas markets. The situation does not seem to have improved.
“Deep and diversified capital markets are important to help economies absorb external shocks and maintain access to financing during periods of uncertainty,” the OECD says.
The recent volatility and trading shutdowns in the South Korean market come to mind, especially as these were centred on a couple of highly followed technology stocks rather than the broad market.
The OECD attributes this phenomenon to high ownership concentration dominated by corporate shareholders, government-connected entities, or strategic investors. These can weaken market discipline and reduce investor confidence.
Corporate financial policies may also be implicated, with relatively low dividend payouts and elevated cash holdings limiting capital distribution and potentially indicating inefficient capital allocation. Meanwhile, low participation by institutional investors and restrictions on foreign investor access can limit market depth.
Many of these factors suggest corporate heads and owners pursuing their own agendas regardless of stock performance and of the broader interests of each particular country and its financial system. The OECD report suggests that it’s time for regulators and policymakers to tackle these interests for the good of the entire region’s financial system.
