Karachi: Pakistan's economic landscape in the third quarter of 2024 showed mixed results, highlighted by Alhamra Islamic Asset Allocation Fund's recent report released on September 30, 2024. The report provides a comprehensive overview of the country's economic health and the performance of its asset management sector.
The country began the fiscal year with positive economic indicators as it secured a staff-level agreement with the International Monetary Fund (IMF) for an Extended Fund Facility (EFF) worth approximately USD 7.0 billion. Despite some initial delays in securing debt rollovers, Pakistan received the first tranche of USD 1.2 billion in September, strengthening the national currency which appreciated by 0.2% to close at 277.7 PKR/USD.
According to information available from the Pakistan Stock Exchange (PSX), the current account deficit (CAD) decreased by 81% year-over-year in the first two months of the fiscal year, due to a major increase in remittance inflows, which surged by 44.0% to USD 1.8 billion. This influx, along with improved foreign exchange reserves—now at USD 10.7 billion—signifies a rebound from the previous fiscal year's challenges.
The economic report detailed a headline inflation rate of 9.2% during the quarter, a significant drop from the 29.0% reported last year, reflecting the stabilizing currency and reduced food prices. This reduction in inflation facilitated lower local fuel costs and contributed to a more controlled economic environment.
The stock market, particularly the KSE-100 Index, showed robust performance, reaching an all-time high of 82,247 points during the quarter. This surge was driven by favorable conditions in the banking and fertilizer sectors, alongside increased dividend yields prompted by monetary easing policies. However, a profit-taking phase at the quarter's end saw the index close at 81,114 points, marking a 3.4% increase quarter-over-quarter.
The fund itself reported a modest return of 2.66%, outpacing its benchmark by 0.21 percentage points, with significant investments in the cement, pharmaceutical, and commercial banking sectors. The net asset value of the fund grew to Rs. 115.0722 per unit, up from Rs. 112.0957 at the beginning of the fiscal year.
Looking forward, the report projects a GDP growth of up to 2.8% for the fiscal year 2025, with an anticipated steady rise in SBP reserves to USD 12.7 billion by year-end. However, challenges such as the potential issuance of international Eurobond or Sukuk remain, given the current global economic conditions.