Professor of Finance and Capital Market, Uche Uwaleke, says the Nigerian Stock Exchange (NSE) will likely close 2020 in red due to coronavirus.
He based his analysis on the negative real Gross Domestic Product (GDP) growth rate forecast by the International Monetary Fund (IMF) and the World Bank.
The lecturer at the Nasarawa State University, Keffi, spoke to the News Agency of Nigeria (NAN) on Thursday.
Uwaleke said despite projections, there might be “some bright spots, especially in sectors not severely affected by COVID-19”.
The don predicted that telecommunication stocks would likely outperform the market because of people’s adaptation in the wake of coronavirus.
Uwaleke asserted that pharmaceutical stocks and insurance companies’ stocks would offer investors increased returns on their investments.
He said major cement players may not disappoint “if the government faithfully implements the Economic Sustainability Plan with a lot of stimulus funds to the housing and construction sectors”.
The professor explained that a lot will depend on the global response to the negative impact of COVID-19 and how soon the world economy gets restarted.
“Market performance will also depend on the level of both local and foreign investors’ confidence in the economy, reflecting the vagaries in the international crude oil market, given that the economy of Nigeria is substantially powered by the oil sector”.
The finance expert said domestic borrowing by the federal government would influence stock market performance generally in the second half of the year.
He said another factor that will influence stock market performance in H2 2020 would be federal government domestic borrowing with the tendency of portfolio rebalancing in favour of bonds being a safer asset class.
“By and large, the performance will be mixed, but more on the bearish side Expectedly, any stock market appreciation will witness a decline almost on toe as investors quickly take profit,” Uwaleke added.