KARACHI: Nine out of 21 equity-based mutual funds outperformed the benchmark index on the Karachi Stock Exchange (KSE) in October, according to data compiled by the Mutual Funds Association of Pakistan (MUFAP).
The rest of 12 mutual funds that invest mainly in listed companies posted a return - on a month-on-month basis in October - that was lower than the corresponding increase in the KSE-100 Index over the same period.
After a dismal performance in the first three months of 2015-16, the performance of equity funds saw a relative improvement in October, thanks to a rebound in the share market. The KSE-100 Index was at 34,261.6 points at the end of October, up 6.1% from the beginning of the month when it stood at 32,287.4 points. The KSE-100 Index is typically the benchmark for most conventional equity funds operating in the country’s capital market.
The best-performing equity funds last month were MCB Pakistan Stock Market Fund (8.29%), JS Large Cap Fund (7.84%), JS Value Fund (7.55%), AKD Opportunity Fund (7.19%) and Atlas Stock Market Fund (7.14%).
Equity funds that performed poorly on a month-on-month basis in October included PICIC Stock Fund (3.21%), PICIC Energy Fund (4.1%), First Habib Stock Fund (4.43%), Askari Equity Fund (5.24%) and NAFA Stock Fund (5.26%).
The performance of equity-based mutual funds in October was far better than that in the preceding month when each of the 21 such funds posted a net loss on a month-on-month basis.
Last month saw foreigners selling their shares on the KSE despite the overall improving sentiment. The net outflow emanating out of foreign selling last month amounted to $48.2 million.
Speaking to The Express Tribune, Intermarket Securities Head of International Sales Dr Gohar Rasool said the KSE-100 Index dropped 5.6% in 2011 with net foreign selling for the 12-month period clocking up at $127 million. Net foreign selling has already reached $228 million in the 10 months of 2015, but the index is still up 6.6% current year to date, he pointed out.
“We believe that it points towards greater absorption capability by local investors,” Rasool said, adding the trend of foreign selling may reverse once the rupee settles against the dollar in the currency market.
According to BMA Capital, the positive sentiment in the market can partly be attributed to a rebound in global markets. The MSCI Emerging Markets Index, which is used by many international investors as a benchmark, inched up 7% on a month-on-month basis while MSCI Frontier Markets Index increased 4%.
It also referred to political stability reflected by smooth by-elections and strengthening macro-economic indicators, such as all-time high foreign exchange reserves, among major reasons for optimism in October.
Data compiled by BMA Capital showed that automobile (13%), oil and gas (10%) and banking (7%) sectors posted better returns than the overall stock market in October. Sectors whose collective returns in October remained underwhelming include electricity (1%), cements (2%) and textiles (3%).
Published in The Express Tribune, November 3rd, 2015.
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