Q1’25 earnings drive sentiments in Nigerian equities

The Nigerian equities market has experienced mixed sentiments in the first quarter of 2025, driven by both positive first quarter earnings and profit-taking by investors on bellwether stocks. Patrick Ejumedia, the Head of Research at Sterling Asset Management and Trustees Limited, provided insights into the market movements. The market has seen a year-to-date increase of around 2.9%, a noticeable drop from the 30.9% recorded at the same time last year. Various factors such as global trade wars, economic uncertainties, and high interest rates are contributing to the market's volatility in the second quarter. Investors are gravitating towards fixed-income instruments due to low risk appetite despite the strong Q1 earnings. The market is waiting for a significant driver to spur growth in the upcoming quarters. Key drivers such as exchange rate stability, inflation rates, and global economic conditions are crucial determinants for market stability. In light of the positive Q1 earnings reports from companies like MTN, Unilever, Aradel Holdings, Total Energies, and CEPLAT, there is hope for improved market performance. However, challenges like oil price fluctuations and trade war impacts on crude oil prices may pose risks to certain sectors. Despite these challenges, companies like MTN have shown resilience with reduced FX losses and increased subscriber numbers. First Bank also reported high profits driven by favorable net interest margins amidst concerns about non-performing loans. Overall, the market outlook remains cautiously optimistic as investors monitor macroeconomic indicators and corporate earnings for future investment decisions.