Dike Onwuamaeze
As Africa braces up to confront the third major Ebola outbreak, the Chief Executive of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has warned that severe and prolonged outbreak of Ebola 3.0 would have a bearish impact on the stock market and may position agricultural, banking, aviation, hospitality and creative industries as losers.
Rewane gave this warning recently in his presentation where he said that Ebola outbreak is a threat to travel, tourism and creative sector, which may suffer significant losses due to cancellation of live events, concerts and movie premieres.
He said: “For a severe and prolonged outbreak, the stock market impact would likely be bearish, driven by weaker economic activity, lower investor confidence, and capital outflows. But if the outbreak is quickly contained, the effect would likely be temporary, similar to Nigeria’s experience in 2014.”
He said that the potential impact of Ebola 3.0 on the stock market may include increased uncertainty that could cause investors to become risk-averse, resulting in market capitalisation and stock prices as domestic investors move funds into safer assets such as Treasury Bills and bonds.
Other effects include “lower corporate earnings expectations, leading to weaker equity valuations” as “international investors typically withdraw funds from countries facing major health crises.” Rewane projected that “banking stocks could come under pressure due to concerns over asset quality and profitability.”
