Morocco - AGR Equity Risk Premium - nov 2021

EXECUTIVE SUMMARY - October 2021
The results of the various methods computed in this 19th edition are as follows :

- The historical risk premium posted a decrease of 0.4 pt, from 5.8% in May 2021 to 5.4% in October 2021. This level is justified by the readjustment of the average market’s gross return over the last 15 years, from 10.5% to 10.1%. At the same time, the average yield of Treasury Bills remains stable at 4.7%;

- The prospective risk premium reached 7.8% in October 2021, up 1.9 pts compared to May 2021. This result takes into account the new post-Covid earnings growth forecasts of listed companies over the period 2021E-2023E.

According to our estimates, the AAGR of lited companies’ recurring profits would settle at 5.0% over this period. Beyond this period, and by 2031E, the target growth rate is around 3.0% per year justified by the mature profile of . This is equivalent to the long-term GDP growth level of large caps.

- The risk premium by the survey method showed an increase of 0.5 pt, from 5.6% in May 2021 to 6.1% in October 2021.
We note that the annual Investors' required return toward the Equity market increased at 8.5% for a 5-year investment.

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