In FY25 (Jul 2024–Jun 2025), Pakistan’s Islamic equity market maintained strong momentum, with the KMI-30 index delivering an approximate 46.23% return year-to-date by end-June 2025. In FY25, Pakistan’s $7 billion IMF Extended Fund Facility remained on track, with disbursements exceeding $2 billion and the second review unlocking ~$1 billion in May. Inflation eased to ~3.2% by June (4.5% average for the year), enabling the SBP to slash the policy rate from 22% to 11%, resulting in strong positive real rates. Forex reserves climbed from USD 9.4 billion to USD 14.51 billion, surpassing IMF targets and covering ~2.5 months of imports. Revived foreign investor interest, particularly in Shariah-compliant large-caps, reflected strengthened macroeconomic fundamentals. PACRA assigned star ratings to three funds out of twenty-one, with the category posting an average return of ~55.62%. The top-performing fund achieved ~73.51%, while NBP Islamic Stock Fund generated a return of ~64.10%, maintaining its 3-Star rating. As of Jun’25, the Fund held ~96.8% in equities for strong exposure to growth sectors. It maintained ~1.3% in cash for liquidity. Sector allocation included ~30.4% in Oil & Gas Exploration, ~15.0% in Cement, ~8.0% in Oil & Gas Marketing Companies and Textile Composite, ~7.6% in Fertilizers and the remaining ~27.8% was spread across other sectors.

Over the three-year horizon, Pakistan’s Shariah-compliant equity market navigated a confluence of structural and macroeconomic headwinds, including policy uncertainty, protracted IMF program negotiations, persistent fiscal imbalances, elevated and volatile interest rate regimes, and sustained inflationary pressures. Notwithstanding these constraints, the segment demonstrated notable resilience, capitalizing on the broad-based market rebound in FY25, underpinned by a calibrated monetary easing cycle, relative exchange rate stabilization, and a resurgence in both domestic and foreign investor risk appetite. PACRA assigned star ratings to two funds out of eighteen, with the segment posting an average return of ~177.09%. The top-performing fund gained ~243.10%, while NBP Islamic Stock Fund delivered a return of ~179.24%, maintaining its 3-Star rating. As of Jun’25, the Fund held ~96.8% in equities for strong exposure to growth sectors. It maintained ~1.3% in cash for liquidity. Sector allocation included ~30.4% in Oil & Gas Exploration, ~15.0% in Cement, ~8.0% in Oil & Gas Marketing Companies and Textile Composite, ~7.6% in Fertilizers and the remaining ~27.8% was spread across other sectors.

Over the five-year horizon, Pakistan’s capital markets have undergone pronounced volatility, driven by protracted IMF program delays, persistent fiscal imbalances, heightened political uncertainty, and pronounced fluctuations in inflation and policy rates. Despite these macroeconomic and structural headwinds, the Shariah-compliant equity segment exhibited sustained resilience. NBP Islamic Stock Fund posted a strong cumulative return of ~216.84%, earning a 4-Star rating from PACRA. This outperformed the category average of ~158.81%, though it lagged behind the top fund's return of ~266.98%. As of Jun’25, the Fund held ~96.8% in equities for strong exposure to growth sectors. It maintained ~1.3% in cash for liquidity. Sector allocation included ~30.4% in Oil & Gas Exploration, ~15.0% in Cement, ~8.0% in Oil & Gas Marketing Companies and Textile Composite, ~7.6% in Fertilizers and the remaining ~27.8% was spread across other sectors.