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Fund manager review on economy in September 2021: -

Sarmaaya Desk
Sarmaaya Content Team

According to the market, the following are the top five mutual funds:

Fund Name Assets No of Funds Market Future
National Investment Trust limited 59 billion 15 Positive
HBL Asset Management Limited 37 billion 30 Positive
Al Meezan Investment Management Limited 4.4 billion 33 Positive
ABL Asset Management Limited 31 billion 30 Neutral
JS Investment Limited 10 billion 24 Positive
National Investment Trust Limited: -

According to National Investment Trust Limited ,The benchmark index declined by 6.86% during the month of September, 2021. Afghanistan related newsflow kept the market nervous during the month. Rising trend in commodities prices also triggered fears of adverse impact on current account balance and higher inflation going forward. SBP raised policy rate by 25bps in its latest MPS indicating future upticks in the key interest rate. SBP also took various measures to curb rising consumer demand to ensure sustainable growth going forward. Foreign investors offloaded positions worth USD 44.94 million during the month. Average volumes during the month stood at 413 million shares, up 13.72% on a MoM basis. NIT IEF posted a return of 6.82% during the month of September, 2021 as against a benchmark return of 6.86% showing an outperformance of 0.04%.

HBL Asset Management Limited: -

According to HBL Asset Management Limited,The govt has adopted a pro-growth budget for FY22, whereby it expects GDP growth rate of 4.8%. In its latest Monetary Policy meeting, the MPC noted that the pace of economic recovery has exceeded expectations, and focus should now be shifted from catalyzing economic recovery toward sustaining it. In order to ensure sustainability of growth, MPC increased Policy Rate by 25bps to 7.25%. The Current Account Deficit (CAD) for Aug-21 clocked in at USD 1.48bn, taking 2MFY22 CAD to USD 2.29bn, compared to a surplus of 838mn during the same period last year. This was primarily driven by higher trade deficit as growth in imports outstripped exports due to increase in international commodity prices, higher machinery imports under TERF, and increase in imports of food items and COVID-19 vaccines. The govt has taken several measures to curtail the rapid increase in CAD, such as increasing interest rate, and imposing 100% cash margin requirement, among others.

Al meezan Investment Management Limited: -

During the month of September 2021,benchmarkKSE-100 index went down by 2,520 points (down 5.31%) to close at 44,900 points. The average daily volume of the market stood at 414mn, up by 14% on MoM basis. Cement, Fertilizer and Oil & Gas Exploration Companies were the major negative contributors to the Index performance. Major reasons behind the decline in the benchmark index were deteriorating macro-economic indicators (rising current account deficit), continuous PKR depreciation again USD and policy rate hike by 25 bps to 7.25%. Further, Pakistan’s downgrade to frontier market from emerging market also dented investors sentiments. Foreigners were net seller with net selling aggregating USD 44.9mn during the month while on local front Individuals, Banks and Insurance Companies were major buyer with net buying aggregating USD 29.1mn, USD 16.7mn and USD 16.3mn respectively. The oil prices increased by 7.58% during the month with Brent closing at USD 78.52/barrel.

ABL Asset Management Limited: -

During the month of September, CPI inflation appeared 9.0% YoY as compared to 9.0% YoY in the same period last year (SPLY).On the monthly basis, a sharp jump has been observed (up 2.12%MoM) primarily on account of sharp rise in perishable food prices. Food inflation rose by 4.0% owing to increase in prices of chicken, cooking oil, ghee, onion, pluses, eggs, and wheat flour. In the Housing index, electricity charges rose substantially coupled with rising oil price continue to transmit the impact in fuel inflation. Going forward we anticipate prices will remain elevated due to PKR depreciation together with potential hike in power tariff around talks with IMF in next couple of weeks. On balance of payment (BOP) front, Pakistan posted current account deficit (CAD) ~USD 1.5 billion during the said period compared to ~USD 814 million in the previous month, taking cumulative current account position to deficit of ~USD 2.3 billion against surplus of ~USD 838 million during SPLY. The primary reason for increase in CAD was due to increase in trade deficit. Exports surged by 4% to ~USD 2.4 billion while imports swelled by 11% to ~USD 6.1 billion. On the flip side, worker’s remittance declined to ~USD 2.65 billion compared to ~USD 2.70 billion during SPLY. Finally, the foreign exchange reserves of SBP stood at ~USD 19.29 billion as of September 24th 2021, providing total import cover of 3.16 months. On the fiscal side, FBR managed to collect ~PK R 546 billion during the month compared to ~PKR 408 billion in the SPLY. In the first quarter of FY 22, FBR has collected net revenue of ~PKR 1395 billion against the set target of ~PKR 1211 billion, exceeding by PKR 186 billion.

JS Investments Limited: -

TheKSE-100declined by 5.3% in September 2021 to close at 44,899 points. The index decline has erased the majority of the gain accrued over the course of the calendar year and turned YTD index performance into negative 5.2%. During September, theKSE30 and KMI30 also declined by 7.2% and 6.9% respectively. Commodity prices have risen and reached record levels due to rising demand (particularly from India and China) which has been based on a quick rebound in the global economy post pandemic. Much of this renewed growth can be due to the outsizes fiscal and monetary stimulus doled out during 2019 and 2020 as compared to the more conservative bailouts of the economy seen during the 2008 Global Financial Crisis. The stimulus measures, enacted globally, have put more money into the pockets of the individual and have thereby fueled demand. Rising demand, and the rebound in economic activity in China and India in particular has created demand for coal, oil, gas and myriad other commodities. At the same time supply remains constrained as commodity supply generally is slow to respond to changes in demand. The situation has been further exacerbated by supply constraints, container shortages and supply chain bottlenecks due to the coronavirus.

Summary: -

The benchmark index declined by 6.86% during the month of September, 2021. Afghanistan related newsflow kept the market nervous during the month. Cement, Fertilizer and Oil & Gas Exploration Companies were the major negative contributors to the Index performance. Major reasons behind the decline in the benchmark index were deteriorating macro-economic indicators (rising current account deficit), continuous PKR depreciation again USD and policy rate hike. Food inflation rose by 4.0% owing to increase in prices of chicken, cooking oil, ghee, onion, pluses, eggs, and wheat flour. Rising demand, and the rebound in economic activity in China and India in particular has created demand for coal, oil, gas and myriad other commodities. At the same time supply remains constrained as commodity supply generally is slow to respond to changes in demand.




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