Risk Premium in Pictures Robust earnings growth offsets higher bond yields

GLOBAL ASSET ALLOCATION 31 July 2026

MONTHLY REPORT Extract from a report

Risk Premium in Pictures Robust earnings growth offsets higher bond yields

Praveen Singh In this monthly report, we outline our proprietary risk premium for 27 developed and 23 emerging markets in the Americas, Europe, Africa, Asia, Australia and New Zealand. Frank Benzimra ◼ Strong equity market performance amid rising bond yield and commodity prices. Most Manish Kabra equity markets have delivered higher returns in a challenging environment. So the key question is Manish Kabra why has the equity market been so resilient despite all the challenges? Head of Global Asset Allocation Alain Bokobza ◼ Equities have re-rated relative to bonds, but not on an absolute basis. The cost of equity (CoE), which we use as a measure of absolute valuation and prospective returns, has not declined. In contrast, the equity risk premium (ERP) has fallen. This suggests that the improvement in the GAA strategist - Paris Arthur van Slooten earnings outlook has been sufficient to offset the valuation impact of higher equity prices, but not enough to fully offset the effect of higher bond yields.

Pierre Bergeron ◼ There is scope for further risk premium compression in Europe and the US, but less so in emerging markets. Europe’s equity risk premium (ERP) remains among the highest in the developed world and is still above its historical average. In the US, the ERP is below its historical Tingyu Zhang average but remains around 60 bps above the 3% threshold, below which equities have historically tended to react negatively. In contrast, ERP levels across emerging markets are generally below average, while earnings growth expectations in most markets, with the exception of Korea and Taiwan, do not appear strong enough to justify further re-rating.

Impact of 50 bps rise in bond yield (keeping Combined impact of 50 bps rise in bond yield all else the same) and “g” on the equity market fair value 12%

-20% URL links to our proprietary methodology in English Source: Datastream, SG Cross Asset Research/Global Asset Allocation

URL links to our proprietary methodology in French

Societe Generale (“SG”) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that SG may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE APPENDIX AT THE END OF THIS REPORT FOR THE ANALYST(S) CERTIFICATION(S), IMPORTANT DISCLOSURES AND DISCLAIMERS. ALTERNATIVELY, VISIT OUR GLOBAL RESEARCH DISCLOSURE WEBSITE

EDITORIAL p3 GLOBAL RISK PREMIUM SUMMARY p8

Developed markets in pictures Emerging markets in pictures

G3: US, Europe and Japan p11 ASIA

EUROPE China A and H shares p21

India, Indonesia and Korea p22 EMU, UK and Small Cap (Europe) p12

Malaysia and Philippines p23 Austria, Belgium and Denmark p13

Finland, France and Germany p14 Taiwan and Thailand p24

Greece, Ireland and Italy p15 LATIN AMERICA

Netherlands, Norway and Portugal p16 Argentina, Brazil and Chile p25

Spain, Sweden and Switzerland p17 Colombia, Mexico and Peru p26

REST OF THE WORLD EUROPE/MIDDLE EAST/AFRICA

Australia, Canada and Hong-Kong p18 Croatia, Czech Republic and Egypt p27

Hungary, Poland and Romania p28 Israel, New Zealand and Singapore p19

Russia, South Africa and Turkey p29

Credit Vs. Equity and Govt bonds p32

Backtest of our premium risk p36