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Discount rate update – September 2021

Update on Market Discount Rates as at 30 September 2021

The market was relatively flat over the quarter to 30 September 2021 with the ASX rising only 0.3% since June 2021 despite stronger earnings growth expectations. With the risk-free rate remaining unchanged, this implies an increase in the EMRP and market discount rates over the period as set out below. 

Market discount rates have declined slightly

 

Sep 2021

Jun 2021

Rf

1.49%

1.49%

Index level (All Ords)

7,630

7,585

Forward PE (All Ords)

17.8x

19.2x

EMRP

6.75%

6.5%

Market cost of equity

8.2%

8.0%

Source: Leadenhall


Questions?

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OTHER NEWS

Discount Rate 31 Dec 2023

Market Discount Rates – 31 December 2023

Optimism around the easing of inflation and potential interest rate cuts led to a rally in equity markets towards the end of December 2023. With markets continuing to fluctuate significantly, the selection of a reasonable discount rate remains a key consideration, whether for the purpose of financial reporting or for any valuation analysis.

Discount rate September 2023

RISING MARKET DISCOUNT RATES

Markets have declined over the last quarter as persistent inflation and the potential for further rate rises continue to weigh on the ASX 200. These fears have seen a rapid increase in government bond yields over the last month. With market conditions continuing to evolve rapidly, we have provided an update on our assessment of discount rates as at 30 September 2023.

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