Karachi: MCB Investment Management Limited released its quarterly report on October 30, 2026, detailing the performance of the MCB Pakistan Asset Allocation Fund for the quarter ending September 30, 2026. The report highlighted significant economic and market fluctuations impacting the fund's returns and asset allocation.
During the initial months of fiscal year 2027, Pakistan's economy experienced a current account deficit of $543 million, a reduction from $853 million in the same period the previous year. The trade deficit increased by 18.8% year-on-year, with a 4.0% rise in exports and an 11.4% increase in imports. Remittances grew by 14.7%, reaching $7.3 billion. As a result, the country's external position remained robust, with the State Bank of Pakistan's foreign exchange reserves rising to approximately $21.4 billion, up from $18.4 billion at the end of the last fiscal year. The local currency appreciated by 0.4% against the US dollar, closing the quarter at 277.1.
Inflation, measured by the Consumer Price Index, averaged 10.2% in the first quarter of FY27, a rise from 4.3% the previous year, driven by higher global oil prices. Fiscal Year 2026 saw Pakistan's GDP grow by 3.7%, with sectoral growth in agriculture, industry, and services at 2.9%, 3.5%, and 4.1%, respectively. The Federal Board of Revenue's tax collection increased by 6.7% year-on-year to PKR 3,083 billion, surpassing the target by PKR 30 billion.
The equity market faced pressure in the first quarter of FY27, with the KSE-100 Index declining by 5.7%, shedding 10,332 points to close at 169,969. Market sentiment was dampened by geopolitical tensions, such as the US-Iran discord and the uncertain reopening of the Strait of Hormuz, which kept oil prices high. Despite positive domestic factors, including an upgrade of Pakistan's sovereign credit rating by S&P Global Ratings and record-high foreign exchange reserves, market performance remained subdued, further impacted by domestic political uncertainties.
According to information available from the Pakistan Stock Exchange (PSX), there was significant selling activity by mutual funds, banks, and foreign investors, resulting in outflows of $64.2 million, $36.2 million, and $2.84 million, respectively. Meanwhile, individuals and corporates absorbed the selling with inflows of $92.8 million and $25.4 million, respectively. Average trading volumes for the KSE-All Index fell to 748.5 million shares from 834.1 million shares in the previous quarter, and average trading value decreased by 12.6% to $118.5 million.
The MCB Pakistan Asset Allocation Fund reported a return of -5.47% for the quarter, underperforming its benchmark return of -3.94%. The fund reduced its equity exposure to 71.2% by the end of September 2026, while increasing cash exposure to 28%. Investments were primarily in commercial banks and cement companies. The fund's net assets decreased to Rs. 1,009 million from Rs. 1,444 million at the end of June 2026, marking a 30.12% decline. The Net Asset Value (NAV) per unit decreased by Rs. 13.5695 to Rs. 234.5224 as of September 30, 2026.