The market is singing a sad song, put on dancing shoes
Wednesday, July 1, 2020 0:01
By RUFUS MWANYASI
Trading at the Nairobi Securities Exchange before the ravages of Covid-19.
Its recently released report, Global Economic Prospects, (June 2020) envisions a 5.2 per cent contraction in global GDP in 2020 — the deepest global recession in decades — despite the extraordinary efforts of governments to counter the downturn with fiscal and monetary policy support.
That weakness will spill over to the outlook of emerging markets and developing countries, who are forecast to contact by 2.5 per cent as they cope with own domestic outbreaks of the virus.
Such a gloomy prognosis, especially if amplified by financial vulnerabilities, could result to a prolonged downturn in the markets.
That said, the realist in me believes that though Covid-19 may linger longer than a few months, the opportunist in me says the crisis is an opportunity now—the market is currently spotting a P/E ratio of 8X and a dividend yield of 5.1 per cent.
