⏸️ MCBIM-FUNDS: HOLD Signal (6/10) – PAKISTAN SOVEREIGN FUND (PSF) TRANSMISSION OF QUATERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2025

📌 Key Takeaways

• 📈 Fund’s net assets increased by 30.76% to Rs. 37,677 million.
• 📊 NAV per unit increased by Rs. 1.31 to Rs. 56.34.
• 📉 Annualized return of 9.44% underperformed against a benchmark return of 10.65%.
• 💰 Cash exposure at period-end was 17.7%.
• 🌐 Pakistan’s revised GDP growth clocked at 3.0% in FY25.
• 📌 CPI averaged 4.2% during 1QFY26 compared to 9.2% in the corresponding period last year.
• 💸 FBR tax collection increased by 12.8% in 1QFY26 to PKR 2,885 billion, missing the target by PKR 198 billion.
• ⚠️ Country posted a current account deficit of USD 624 million in the first two months of fiscal year 2026.
• 💹 Remittances inflows grew at a healthy rate of 7.0% to USD 6.4 billion.
• 🔒 SBP’s foreign exchange reserves remained stable around USD 14.4 billion.
• 🇵🇰 USD/PKR appreciated by 0.9% to 281.3 during the fiscal year.
• 📉 The SBP has decreased interest rates by a cumulative 1,100bps since June-24, declining to 11.0% from 22.0%.
• 🔮 GDP growth is expected to clock at 3.5% in FY26, with agriculture at 2.8%.
• 🎯 Fiscal deficit is expected to clock in at 4.0% in FY26, the lowest since FY2006.
• 🏦 Open-end mutual funds industry increased by about 10.3% during 1QFY26 to PKR 4,065 billion.

🎯 Investment Thesis

Given the mixed performance, specifically, asset appreciation is positive, but failing to meet the benchmark is concerning. I would advise a HOLD position for MCBIM-FUNDS while monitoring the fund’s ability to increase returns. The price target is cautiously set at Rs. 57.00 based on a modest expected growth in NAV over the next quarter. Improved investment strategies are required to meet targets. This is a HOLD until improvements are seen.