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 – November 2019
Political uncertainties over the past quarter remain unresolved, such as the potential conflict between the US and Iran, trade dispute between the US and China, and the Brexit negotiations. Of these, it is the trade war between China and the US that continues to present one of the biggest risks for the global economy. Announcements of further customs duties in the third quarter of 2019 added to the uncertainty.
The measures initiated by US President Donald Trump are also being directed against other economies such as the EU. In response to each other’s announcement of the imposition of new tariffs, both parties began to increase the tariffs on a number of products, which may lead to a further escalation.
At the same time, the EU is preparing for the Brexit summit in mid-October, at which the UK’s resignation agreement will be discussed, while British Prime Minister Boris Johnson maintains that a no-deal Brexit is still an option.
As a result of these developments and low inflation rates, central banks around the world continued to cut interest rates over the past three months. The US Federal Reserve decided to suspend its tight monetary policy and lower interest rates too.
These issues also impact exchange rates, of course. As such, it is timely to share in this newsletter – which we will title from this edition on “Quarterly Brief” to emphasize its benefits – our insights into currency conversion in company valuation, in addition to an update on recent capital market data that are relevant to any valuation analysis in these turbulent times:
- Major stock market performances: Emerging markets significantly decline in Q3
- EURO STOXX 600 sector multiples: IT dominates Q3 but loses significantly on a quarterly basis
- Current risk-free rates for major currencies: Interest rates continue to decline
- Recent country risk premiums and inflation forecasts for the BRIC countries: Both short-term growth expectations and risk premium for China have increased
We hope you enjoy this newsletter and look forward to discussing with you any questions you might have regarding valuation trends and practices.
Read the full document here below.