Karachi: The Pakistan Capital Market Fund reported a quarterly decline amid a challenging economic landscape and global geopolitical tensions, according to the unaudited quarterly report released by MCB Investment Management Limited for the quarter ended September 30, 2026. The fund posted a return of -4.06%, underperforming its benchmark, which recorded a return of -2.29%.
The country's economic indicators reflected mixed outcomes during the initial months of FY27. The current account deficit narrowed to USD 543 million from USD 853 million in the same period the previous year. Despite the improvement, the trade deficit widened by 18.8% year-on-year, driven by a 4.0% increase in exports and an 11.4% rise in imports. Remittance inflows surged by 14.7% to USD 7.3 billion, and the State Bank of Pakistan's foreign exchange reserves grew to USD 21.4 billion, a significant increase from USD 18.4 billion at the end of the last fiscal year.
Inflation, measured by the Consumer Price Index, averaged 10.2% in the first quarter of FY27, a substantial rise from 4.3% in the previous year. The increase was primarily attributed to higher global oil prices, which led to increased domestic fuel costs and broader inflationary pressures. Meanwhile, Pakistan's GDP growth was recorded at 3.7% in FY26, with growth across the Agricultural, Industrial, and Services sectors.
In the equity market, the KSE-100 Index saw a decline of 10,332 points, or a 5.7% fiscal year-to-date drop, closing at 169,969 points. The decline was attributed to escalating US-Iran tensions and uncertainties surrounding the reopening of the Strait of Hormuz, which pushed Arab Light crude prices above USD 110 per barrel in September. Despite positive domestic developments, including an upgrade in Pakistan's sovereign credit rating by S&P Global Ratings and all-time high foreign exchange reserves, market sentiment remained cautious.
According to information available from the Pakistan Stock Exchange (PSX), major net sellers during the quarter included Mutual Funds, Banks, and Foreign investors, with outflows of USD 64.2 million, USD 36.2 million, and USD 2.84 million, respectively. Individuals and Corporates absorbed the selling with inflows of USD 92.8 million and USD 25.4 million. Trading volumes for the KSE-All Index averaged 748.5 million shares, a decrease from 834.1 million shares in the previous quarter. The average trading value also declined by 12.6% to approximately USD 118.5 million.
Sector-wise, Cement, Power, and Technology were significant detractors from the KSE-100 Index, while Commercial Banks and Fertilizer sectors also faced pressure. Conversely, the Refinery and Insurance sectors partially offset the decline by adding points to the index.
As of September 30, 2026, the Net Assets of the Fund were Rs. 914 million, down from Rs. 992 million on June 30, 2026, marking a decrease of 7.86%. The Net Asset Value per unit decreased by Rs. 1.27, closing at Rs. 29.99 from Rs. 31.26 at the start of the quarter. The fund's equity allocation was primarily in Commercial Banks and Oil & Gas Exploration Companies, while its fixed income strategy favored cash to leverage attractive bank rates.