Market Performance
The Islamic sukuk market remained inactive and no substantial trades were witnessed in the secondary market. Islamic banks and financial institutions remained fairly cash rich but failed to book substantial assets as advances. The rates on deposits also remained low.
Fund Performance
The fund registered some negative hits due to revaluation impact during the month which somewhat counterbalanced last month’s exceptional returns. No new exposure was taken in sukuks during the period. The fund is expected to spawn stronger returns over the new fiscal year as all troubled sukuks have already been restructured and are making timely payments.
Future Outlook
The country’s consistently high fiscal deficit has become a major challenge as the government is financing itself either by borrowing from the commercial banks (which is crowding out the private sector) or from SBP (which is keeping inflation higher). As these problems are expected to remain intact in the short term, we expect the interest rates to remain on higher side.