The 8th edition (30 June 2021) of ValueTrust’s “European Capital Market Study” compiles capital market parameters such as cost of capital and implied as well as historical risk premiums for European countries. The study also includes trading multiples and total shareholder returns across a wide range of industries. Here are a few key findings:

• The risk-free rate in Europe increased from -0.14% as of 31 December 2020, to 0.33% currently;
• The implied market return derived from STOXX Europe 600 is now 7.4%, so, taking the risk-free rate of 0.33% into account, the implied market risk premium is 7.1%; and
• The implied sector return (unlevered) of the energy sector increased from 4.0% as of 31 December 2020 to 5.6% as of 30 June 2021, which is the largest increase compared with the other sectors.

ValueTrust’s new “European Capital Market Study” is available here.