Strength-6

⚡ Flash Summary

HBL Asset Management Limited’s transmission of the Quarterly Report for the period ended September 30, 2025, focuses on its conventional funds. Pakistan’s macro-economic outlook demonstrated further improvement during the quarter, supported by strengthened external accounts and increased foreign-exchange reserves. However, the State Bank of Pakistan maintained its policy interest rate due to emerging inflation risks and supply-side pressures. Pakistan’s equities market witnessed a strong rally, with the KSE-100 Index closing at a record high, driven by renewed investor optimism and improved corporate earnings.

📌 Key Takeaways

• Average annual inflation for the July-September quarter stood at 4.22%, significantly lower than the 9.19% recorded in the same period the previous year. 📉
• The KSE-100 Index gained significant momentum to close the quarter at a record high of 165,493 points, up by 39,866 points or 32%. 📈
• The KSE-All-Share Index recorded an average daily trading volume of 952 million shares and a value of PKR 44 billion, up 52% and 48%, respectively. 📊
• The money market remained largely stable, with the State Bank of Pakistan maintaining the policy rate at 11%. 🏦
• The total income and net income of the HBL Income Fund were Rs. 207.51 million and Rs. 181.62 million, respectively. 💰
• The Net Asset Value (NAV) per unit of the HBL Income Fund was Rs. 115.8839, giving an annualized return of 9.13%. ✨
• The size of the HBL Income Fund was Rs. 6.38 billion. ⚖️
• VIS Credit Rating Company Limited reaffirmed the Fund stability rating of A+(f) to the HBL Income Fund. ✅
• The total income and net income of the HBL Government Securities Fund was Rs. 142.35 million and Rs. 125.04 million, respectively. 🏦
• The Net Asset Value (NAV) per unit of the HBL Government Securities Fund was Rs. 116.7528, giving an annualized return of 9.36%. 📈
• The total income and net income of the HBL Money Market Fund was Rs. 1,052.76 million and Rs. 899.47 million, respectively. 💰

🎯 Investment Thesis

Given attractive valuations, improving macroeconomic indicators, and declining interest rates, a HOLD recommendation is appropriate. However, risks from global commodity shocks and geopolitical tensions should be monitored.

⚡ Flash Summary

HBL-FUNDS reported the quarterly report for the period ended September 30, 2025, for its Islamic Funds. The review highlights a strengthening external-account position, significant increases in remittances from overseas Pakistanis (8.4% year-on-year), and stable foreign exchange reserves. Headline inflation eased to 5.6%, although core inflation remained elevated at 7.3%. The KMI-30 Index delivered a remarkable 33% gain, indicating improved investor sentiment, supported by stable macroeconomic indicators and the State Bank of Pakistan’s maintained policy rate.

📌 Key Takeaways

• 📈 KMI-30 Index surged by 33%, gaining 61,380 points to close at 246,267.
• 💰 Current account deficit stood at USD 594 million, up from USD 502 million in the previous year.
• 💸 Remittances increased by 8.4% year-on-year to USD 9.5 billion.
• 💹 Headline inflation eased to 5.6%, compared to 6.9% in the prior year.
• 📌 Policy rate maintained at 11.0% by the State Bank of Pakistan.
• ✨ Real GDP growth clocked in at 3.04%, exceeding previous estimate of 2.68%.
• 🌍 Foreign investors net sellers, offloading equities worth USD 136 million.
• 📊 Average daily trading volume on KMI-All-Share Index up 29% quarter-on-quarter.
• 🏦 Top positive contributing sectors: Cement, Oil & Gas E&P, Power, Investment Banks, Banks, Technology & Communication.
• 🤝 IMF’s Extended Fund Facility supporting Pakistan with a second tranche of $1.023 billion disbursed.
• 💲 External financing requirement for FY26 at USD 17.3bn, largely met via bilateral support and program loans.
• 🎯 Inflation projected at 5.4% for FY26, benefiting from PKR stability and base effects.
• 📉 Money market yields remained relatively stable with minimal policy rate cuts anticipated

🎯 Investment Thesis

Based on the analysis, a HOLD recommendation is most appropriate given the improving macroeconomic factors offset by existing risks. The substantial gains in the KMI-30 Index suggest current prices may already reflect anticipated improvements. Investors should continue to monitor economic developments and adjust positions accordingly. The potential for future gains exists, although caution is warranted until structural reforms create further value and macroeconomic stability is demonstrated.