Karachi: The Board of Directors of NBP Fund Management Limited has released the unaudited condensed interim financial statements for the NBP Balanced Fund (NBF) for the quarter ending September 30, 2026, highlighting the fund's performance amid challenging market conditions. The report, dated November 3, 2026, reflects the broader economic and geopolitical dynamics influencing the investment landscape.
During the first quarter of fiscal year 2027, the KSE-100 Index experienced a significant decline of 5.7%, losing 10,332 points to close at 169,969 points. This downturn was influenced by ongoing US-Iran tensions and a sharp increase in global oil prices, which raised concerns about inflation, the external account, and interest rate trends. The index alone fell by 4.0% in September.
Despite inflationary pressures, macroeconomic indicators showed signs of improvement. The State Bank of Pakistan's foreign exchange reserves reached a record USD 21.4 billion in September, exceeding the end-June 2027 target of USD 21 billion, bolstered by Pakistan's largest-ever USD 3 billion Eurobond issuance. The current account deficit narrowed by 16% year-on-year to USD 874 million during the first quarter of FY27, with workers' remittances increasing by 14% to USD 10.9 billion. The SBP anticipates remittances to surpass USD 44 billion in FY27, and external debt servicing is projected to decrease by approximately USD 5 billion to USD 21.5 billion. Fiscal performance remained stable, with the FY26 primary surplus at 2.9% of GDP, and the Federal Board of Revenue meeting its targets from July to September. Reflecting these positive developments, Moody's upgraded Pakistan's sovereign rating to B3 in August, following S&P's upgrade to B in July. The SBP forecasts real GDP growth of 3.5%-4.5% in FY27, supported by improved agricultural prospects and recovering high-frequency indicators.
Inflation remained a concern, averaging 10.2% in the first quarter of FY27 compared to 4.3% the previous year, driven by higher energy prices. However, it eased to 10.3% in September from 11.1% in August. The SBP maintained the policy rate at 11.5% in September, anticipating inflation to fall within the 8%-9% target range by end-June 2027, though persistent high oil prices could lead to further monetary tightening.
An important milestone was achieved post-quarter-end with the announcement of a Staff-Level Agreement with the IMF on October 7, concerning the fourth review under the Extended Fund Facility and the third review under the Resilience and Sustainability Facility. Subject to IMF Executive Board approval, this agreement is expected to unlock approximately USD 1.2 billion, enhancing external buffers and investor confidence.
Sector-wise, Commercial Banks, Fertilizer, Food & Personal Care Products, Insurance, Investment Banks/Companies, Oil & Gas Exploration, Refinery, Sugar & Allied Industries, Tobacco, and Transport sectors outperformed the market. In contrast, Auto Parts & Accessories, Cable & Electrical Goods, Cement, Engineering, Glass & Ceramics, Leather & Tanneries, Modaraba, Oil & Gas Marketing, Paper & Board, Pharmaceutical, Power Generation & Distribution, Technology & Communication, Textile Composite, and Textile Weaving sectors underperformed.
Market participants saw Individuals and Companies as the largest net buyers, with inflows of USD 93 million and USD 25 million, respectively. Conversely, Mutual Funds, Banks/DFIs, and Brokers reduced their net holdings by USD 64 million, USD 36 million, and USD 10 million, respectively.
According to information available from the Pakistan Stock Exchange (PSX), the near-term market direction will remain linked to developments in the Middle East and global oil prices. However, record foreign exchange reserves, robust remittances, renewed access to international capital markets, and continued IMF engagement provide support to the macroeconomic outlook.
Gold prices showed volatility during the first quarter of FY27. Prices remained stable in July, then surged approximately 10% in August, marking gold's strongest monthly gain since January. A decline in US economic data lowered expectations of further Federal Reserve rate hikes, boosting investment demand. Part of the gain was reversed late in the month due to hawkish Fed signals. The rally reversed in September, with gold prices decreasing by 6.6% during the month. The US Federal Reserve raised rates by 25 basis points, and a sharp rise in US Treasury yields, a stronger US dollar, and higher oil prices added pressure. Despite the correction, gold ended the quarter modestly higher than its end-June level, indicating continued investor interest. Looking ahead, the outlook for gold remains constructive due to geopolitical uncertainty, central-bank reserve diversification, and gold's role as a portfolio diversifier, though US interest rates, the US dollar, and real yields will remain key drivers of potential vol atility.
The NBP Balanced Fund's size decreased from Rs. 2,131 million to Rs. 2.038 million during the period, indicating a 4.4% decline. The unit price of the NBF fell from Rs. 44.3230 on June 30, 2026, to Rs. 42.5065 on September 30, 2026, a decrease of 4.1%. The benchmark index saw a decrease of 1.7% during the same period, meaning the Fund underperformed its benchmark by 2.4%. Since inception, the NAV of the Fund has increased from Rs.2.6600 (Ex-Div) on January 19, 2007, to Rs. 42.5065 on September 30, 2026, showing an increase of 1,498.0%, while the benchmark increased by 1051.3%, translating into an outperformance of 446.7%. The NBP Balanced Fund reported a total loss of Rs. 69.30 million during the period, and after deducting expenses of Rs. 17.98 million, the net loss stood at Rs. 87.28 million.