discount rates early warning June 2024

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DISCOUNT RATES EARLY WARNING 28 JUNE 2024

STABLE MARKET DISCOUNT RATES

Markets have remained relatively stable over the last quarter as inflation has moderated but remained high. However, there was a slight increase in government bond yields. With market conditions continuing to evolve, we have provided an early warning on our assessment of the equity market risk premium (EMRP) as at 30 June 2024 for Australia.

Michelle Bullock, Governor of the RBA recently commented, “Inflation in Australia has passed its peak but is still too high and will remain so for some time yet. Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late.”

The ASX200 ended the month of May 2024 2.5% lower than 31 March 2024. With an increase in government bond yields, this implies a decrease in the EMRP for Australia. As a result, we are set to decrease our assessment of the EMRP to 5.25% as at 30 June 2024.

The impact of these changes on overall market discount rates is presented below

Source: Leadenhall

With an increase in government bond yields offsetting a decrease in EMRP, overall market discount rates are unchanged from March 2024.

Companies should continue to adopt discount rates unchanged from the prior period on their valuations, whether on their investment decisions or for impairment testing.

For further information on selecting an appropriate discount rate for your company please feel free to call us.

Leadenhall Solution:

Leadenhall has provided valuation expertise and advice for more than 30 years. We specialise in the valuation of businesses, companies and intellectual property as part of:

  • Independent expert’s reports for listed and unlisted public companies
  • Dispute resolution and shareholder determinations
  • Financial reporting including impairment assessment, intangible assets and financial instruments
  • Tax compliance
  • Transaction evaluation

The Leadenhall Difference:

Leadenhall doesn’t just offer thought leadership; it prides itself on knowledge delivery.

You can trust us to go beyond the maths, provide you with a deeper understanding of the assumptions made and produce a valuation that you truly understand. 

That means you can proceed with certainty, safe in the knowledge that you won’t risk your reputation – or the outcome of any transformative business decision you make.

NOW YOU KNOW

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OTHER NEWS

stable market discount rates March 2024

STABLE 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.

Appraisal Foundation brief Professional Interactions Unique to Fair Value for Financial Reporting

Guidance regarding interactions between auditors and valuers

The Appraisal Foundation recently issued for comment a draft valuation brief titled Professional Interactions Unique to Fair Value for Financial Reporting. The article made several practical recommendations that are applicable to almost all auditor and valuer interaction.