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Olugbemi. Adeyinka Ogunleye
3 weeks ago
Overview
Market Watch: From Rate Cuts to Dividends – Where Will the Smart Money Flow?
Na wa o! Whenever the Central Bank makes a move, the whole financial market catches cold. On this week’s Market Watch, as always, host Frank had the Market Watch duo, Idika Aja and Muktar Mohammed in the studio to make sense of the MPC’s unexpected decision to lower the Monetary Policy Rate by 50 basis points to 27 percent.
The show started off with Idika explaining that this easing cycle is coming on the back of falling inflation, which dropped from 21.83% in July to 20.13% in August.
He noted that the lower policy rate will reduce yields on government securities, prompting investors to shift toward equities, while banks will benefit from improved liquidity.
However, he cautioned that lenders would remain risk-averse, directing credit only to safe borrowers rather than expanding lending to individuals and SMEs.
Muktar added that the CBN’s decision aligns with global trends, as countries like Ghana, Angola, and even the United States have also trimmed rates in recent months.
The conversation then shifted to corporate earnings, with GTCO’s H1 2025 results in focus. The bank reported a sharp decline in profit after tax to ₦449 billion, down from ₦995 billion in H1 2024, alongside weaker revenues and earnings per share.
Muktar saw this as a sign of confidence for the market, but he also pointed out worries about the bank’s increasing dependence on investment securities, which now make up 35 percent of its interest income.
Looking ahead, Frank, Idika, and Muktar agreed that the fixed income outlook remains uncertain. Lower rates generally lead to weaker yields, but Nigeria’s double-digit returns, around 14 to 15%, are still attractive to foreign investors.
Want the full story and expert analysis? Click the link below to watch this week’s Market Watch episode and see the discussion in action.
Credit: Nairametrics
