(KKR) US investment firm KKR highlighted South Korea as one of Asia's most compelling valuation opportunities, arguing that ongoing corporate governance reforms could unlock significant upside, the firm said Thursday.In its midyear 2026 outlook report, "The Divergence Conundrum," Henry McVey, head of Global Macro & Asset Allocation and chief investment officer of KKR Balance Sheet, described Korea's corporate reform story as "one of the more underappreciated opportunities in Asia," alongside Japan.The report said Korea is following a similar path of Japan's corporate reform, "as management teams and policymakers increasingly recognize that the 'Korea discount' has often been self-inflicted through weak governance, opaque structures and sub-optimal payout policies."KKR said the country's corporate reform drive, combined with growing shareholder activism, has already helped propel gains of more than 95 percent year to date in 2026.Despite the recent rally, roughly 70 percent of Korean listed companies continue to trade below book value, compared with about 40 percent in Japan and less than 7 percent in the US, the equity firm noted.Referring to Korea and Japan, KKR said that opportunity can broaden "because the real upside is not just multiple expansion, but a durable improvement in margins, cash conversion and the quality of the earnings stream."The firm said investors should look for opportunities tied to governance reform, capital returns, carve-outs, strategic partnerships and private capital solutions in both markets.It added that Japan and Korea still appear "cheap," with corporate earnings in both markets likely to surprise on the upside in 2026 and 2027.The opportunity in Korea could ultimately prove larger than in Japan as reforms gain traction across the corporate sector, KKR noted.While Korea's reform effort is "earlier and more difficult," it is also "potentially more rewarding if reforms continue to advance," the report said.