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International Valuatons Newsletter - July 2019

International Valuatons Newsletter

Our International Valuation Newsletter series addresses current hot topics and upcoming themes. While some articles may focus on particular sectors or asset classes, all will have one thing in common: The provision of insights into the development and practical implementation of solutions to common challenges when valuing businesses and business assets. The newsletter is therefore of interest to those involved in valuations for transactions, financing, tax, accounting, restructuring and dispute resolutions, among other areas. It is also highly relevant to academics, lawyers and government or tax authorities.

International Valuations Newsletter – July 2019

The trade conflict between China and the US is just one of many ongoing disputes around the world. However, the G20 summit at the end of June may have produced a first step to end the huge tariff increases and their negative impacts on economic developments. The significant oil price increase in the immediate aftermath indicates the potential effects of any escalation. In Europe, elections to the European Parliament in Q2 revealed large gains for far-right parties.

Combined, the ongoing political uncertainties, a weak US dollar, and a possible easing of the Federal Reserve and the ECB’s monetary policies have driven investors to a traditionally safe-haven investment – gold. Its price hit a six-year high at the end of June, having gained more than 9.2% in Q2 2019 while the S&P 500 and EUROSTOXX 600 gained 3.8% and 1.5% respectively.

As the results of these developments continue to be observed and digested, this edition of KPMG’s International Valuation Newsletter shares an update on recent capital market data that are relevant to any valuation analysis in these turbulent times:

  • Major stock market performances: US indices outperformed by SMI
  • EURO STOXX 600 sector multiples: Mainly flat while IT dominates Q2 2019
  • Current risk-free rates for major currencies: Interest rates continue to decline
  • Recent country risk premiums and inflation forecasts for the BRIC countries: Stable, high growth rates expected over the coming years for India and Brazil

 

In addition, we shed some light on valuation considerations resulting from the new IFRS 16 leasing standard. We hope you enjoy this newsletter and look forward to discussing with you any questions you might have regarding valuation trends and practices.

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