Despite gloomier economic forecast by International Monetary Fund (IMF) and World Bank the Nigerian Exchange Stock (NSE) as remained relatively unchanged since IMF revised Nigeria’s economic contraction downwards from 2.4 percent to 5.4 percent since the 24th June 2020
3 weeks since the revision of the 2020 Nigeria’s economic forecast, the Nigerian Exchange Stock All Share Index (ASI) as return a negative 1.5 percent. Although the market dipped marginally it appears that investors are not significantly concerned with the steepness of the economic contraction this year, which is expected to be at least twice as worse as the economic contraction in 2016.
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Analyst say the marginal drop may simply be as a result of investors repricing stocks based on the new forecast, as they had earlier priced stocks using the -4.4 percent growth forecast issued by the Nigerian federal government in its 2020 revised budget.
Year to date the Nigerian All Share Index has returned a negative 9.49 percent showing investors are deeply concerned about the earnings performance of companies this year as the world battles with the global health pandemic which as triggered city lockdown and negatively disrupted economic activities all over the word
However, Zainab Ahmad Nigeria’s finance minister had recently disclosed that the economic growth in Nigeria could in the worst case scenario contract as much as 8.94 percent in 2020 but in a best case the contraction could be just be 4.4 percent if there is no fiscal stimulus
But with the fiscal stimulus package the economy would contract by 0.59 percent, with each state looking to get an average of N200 billion from the World Bank in fiscal stimulus by the end of September she said.
