The International Monetary Fund (IMF) has expressed concerns about high company valuations and their potential impact on financial stability. Tobias Adrian, the IMF's director of monetary and capital markets, highlighted the risk posed by stretched company valuations, which could make them vulnerable to an economic shock. The IMF specifically pointed to credit markets, where spreads remain tight despite deteriorating borrower fundamentals. Additionally, the IMF is worried about the commercial real estate sector, particularly for medium and small-sized lenders. These concerns were outlined in the IMF's World Economic Outlook, which slightly upgraded its global growth forecast to 3.2% in 2024. However, the report also noted downside risks, including inflation and uncertain interest rate paths [434734ba].
The Executive Secretary/Chief Executive, Financial Reporting Council (FRC) of Nigeria, Dr. Rabiu Olowo, has emphasized the importance of a credible valuation system in achieving Nigeria's ambition for a $1 trillion economy by 2026. Olowo stated that there is a strong connection between valuation and global competitiveness in business, attracting investors and improving financial reports. The FRC has recently established a directorate of valuation standards and aims to align with global valuation practices. The Chief Executive of the International Valuations Standards Council (IVSC), Mr. Nicholas Talbot, commended Nigeria as a leading practice and highlighted the significance of strengthening valuation standards to boost investor confidence and accelerate economic expansion. The FRC is the apex regulatory body for accounting, auditing, valuation, actuarial, and sustainability standards in Nigeria [2e5f1f67].