Strength-6

⚡ Flash Summary

MCB Pakistan Sovereign Fund’s report for the quarter ended September 30, 2025, indicates a mixed performance amid evolving economic conditions. The fund generated an annualized return of 9.44%, lagging behind its benchmark return of 10.65%. Net assets increased significantly by 30.76% to Rs. 37,677 million compared to the previous quarter. The NAV per unit rose to Rs. 56.34, showing a modest increase of Rs. 1.31 per unit. The fund maintains a substantial cash exposure of 17.7%.

📌 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.

⚡ Flash Summary

The ALHAMRA Islamic Stock Fund (ALHISF) quarterly report for the period ended September 30, 2025, reveals a mixed performance amid a dynamic economic backdrop. While the KSE-100 Index soared by 31.7% year-to-date, ALHISF delivered a return of 24.60%, lagging behind its benchmark of 33.20%. The fund’s net assets experienced a significant 80% increase, reaching Rs. 11,583 million, and the NAV per unit rose by Rs. 5.91. Fund is shifting allocation strategy between sectors.

📌 Key Takeaways

• 📈 KSE-100 Index increased by 31.7% FYTD.
• ⚠️ ALHISF return was 24.60%, underperforming the benchmark return of 33.20%.
• 💰 Net Assets of the Fund increased by 80% to Rs. 11,583 million.
• 💎 NAV per unit increased by Rs. 5.91 to Rs. 29.93.
• 🌍 Pakistan’s GDP growth is expected to be 3.5% in FY26.
• 🌾 Agriculture growth is expected to be 2.8% in FY26 due to flood impact.
• 🏦 FBR tax collection increased by 12.8% in 1QFY26 to PKR 2,885 billion.
• 💲 Country posted a current account deficit of USD 624 million in the first two months of fiscal year 2026.
• 💸 Remittances inflows grew by 7.0% to USD 6.4 billion.
• 🏦 SBP’s foreign exchange reserves remained stable around USD 14.4 billion.
• 📉 Headline inflation averaged 4.2% during 1QFY26, compared to 9.2% last year.
• ⚖️ The market is currently trading at a forward Price to Earnings ratio of 8.1x, offering a dividend yield of 6.0%.
• 🏦 Fund exposures were majorly in Commercial Banks, Cements, and Oil & Gas Exploration Companies.
• 💸 Foreign investors and Banks were major net sellers with an outflow of USD 132.1 million and USD 150.0 million, respectively during 1QFY26.

🎯 Investment Thesis

HOLD. While ALHISF has demonstrated growth in net assets, its underperformance relative to the benchmark raises concerns about its investment strategy. A HOLD recommendation is appropriate until the fund can demonstrate a consistent ability to generate returns in line with or exceeding its benchmark. Further analysis is needed to understand the reasons for the underperformance and whether management changes are warranted.