- Gold climbed 19.2% after a gain of RS52 600 in 2024.
- The KSE-100 of PSX increased by 84% in 2024, continues.
- The crypto remains at high risk, adapted to young investors.
Karachi: Pakistan’s financial markets have experienced a strong upward trend in recent months.
The KSE-100 Benchmark index of the Pakistan Stock Exchange (PSX) jumped 84% in 2024, ending the year at 115,127 points, and has since climbed 2.3% to 117,806.75, according to The news.
Gold also provided solid yields, closing 2024 to Rs272 600 – a gain of RS52 600 – and has since climbed from 19.2% to Rs325,000.
In the middle of this performance by traditional active ingredients, Pakistan also ventures into emerging sectors. The creation of Pakistan Crypto Council reflects the country’s intention to adopt cryptocurrencies, a decision greeted by several financial experts.
While the financial markets see a reshuffle, investors may wonder how to diversify their investment portfolio to make the most of the bull markets. Most importantly, what should they choose: gold, stocks or cryptocurrencies?
In his conversation with The newsMustafa Fahim, an investment banker working in the Middle East, says that “it is a great thing that Pakistan adopts the crypto movement and the class of cryptographic assets, the three assets should be part of the portfolio of an investor.”
He says that the allocation of assets depends on the temporal horizon, age and risk appetite. “If someone is young, he can have a greater proportion of his investment in the crypto (for example around 10%), which is high, the crypto is a very volatile asset, and the investor who is looking for decent and relatively stable yields should not have much in his portfolio.”
But Fahim advises investors to have a larger share of their investment in stocks, in particular index funds, on the Pakistani stock market.
Recognizing the intrinsically volatile nature of shares, the investment banker adds that “volatility is not high, especially when someone is investing in index funds because he invests in stable actions such as large companies in Pakistan. Over the years, the stock market has given an average annualized return of around 20%, which is good. ”
Fahim advises to keep a large part of the investments – around 60 to 70% – in the shares which, he said, will increase the most in the future.
Shankar Talreja, research director at Topline Securities, believes that Pakistani actions have “a much better place to play in the next 12 months”. He says that the IMF exam will further improve the overall confidence of investors.
“Currently, our market is estimated at 5.5x from the multiple profits, and historically, the market has been negotiated at 7x of profits. This provides an advantage of 27%, and with the yield of dividends of 10%, the total yield can be around 35 to 40%. ” Explains Talreja.
On gold, Talreja says that the price of more than 3000% of the ounce guarantees a certain caution and that, in Pakistan, the yield of gold constitutes both an appreciation of the international prices of gold and the movements of our currency.
“Thus, in my opinion, the return to gold in the next 12 months would be much lower than the last 12 months. Generally, gold is considered a safe refuge in times of uncertainty,” he said.
Muhammad Usman Siddiqui, research analyst covering MENA actions, also considers gold as a stable option during periods of uncertainty, calling gold the class of preferred assets for investors. He says that taking into account the current global economy and the uncertain political situation, such as the Russian-Ukraine war, most investors are leaning towards gold.
In the past 30 days approximately, “we have seen investors withdraw money from stocks and invest in safer assets [like gold]“Since it tends to perform well during higher inflation and recession.
He notes that even if gold is safer, actions are the best choice in Pakistan. According to Siddiqui, shares are much more affordable because investors can buy first -rate companies at relatively cheap prices. “In my opinion, the asset allocation could be: 50% gold, 40% shares and a small crypto piece – only for an exhibition.”
He adds that since Crypto is not yet an asset developed in Pakistan in terms of regulation, “being a conservative investor, I would not recommend investing in this asset class, in particular those who can use their savings or retirement funds for investments.”
Young investors with higher risk tolerance can allocate a small part to the crypto. “But still, I would go with the investment philosophy of the old one, which is the shares, the stock market and gold.”
Also for the stock market, he advises investors to choose first -rate companies, because they have less volatility in their profits and their income and are more likely to withstand any wind from an economic and political side.
On affordability, a small investor based in Karachi, asking for anonymity, echoes the argument of Siddiqui. He says that for investing in gold, investors would need “millions of rupees. While, in actions, the trading course could be started from a lower amount. ” He adds that we can enter the cryptographic and stock markets with only Rs 100,000.
According to him, there is still uncertainty around the crypto: “If the government is serious about the legalization of money, it would be an excellent addition. Investors should have the ease of rope in their bank accounts for the cryptography trade. ”
For Fahim, gold is a safe and stable asset, but it should not dominate an investment portfolio because its yields are relatively modest. He says that “while in the past two years, gold has experienced decent increases – around 40%, if we look at its annualized return in the last 20 to 30 years, its return has not been as high as investors could obtain actions – or even the crypto”.
The allocation of Fahim’s assets VA: Priority must be stocks for long -term growth, followed by gold as a stabilizing asset, then crypto as a high -risk and high reward option. In Crypto, “Bitcoin is a better option because it is original digital currency.” He thinks that “Bitcoin is there to stay”.
“Gold must be in the portfolio, but as a class of stabilizing assets-in the event of liquidity problems, gold can be easily liquidated,” he explains.
Talreja also advises caution concerning cryptocurrencies. “Although [crypto’s] The adaptation ratio increases, it is a very volatile and high risk investment class without clarity on its return expectations for the next 12 months, at least for me. »»
Although financial experts and investors do not look at crypto, unofficial figures say that there are about 20 million crypto users in the country recorded on various exchanges. The blockchain analysis company has classified Pakistan’s ninth in its 2024 global adoption of cryptography.
On the other hand, the market participation remains low, with 324,952 individual business accounts and 9,685, according to the central DEPOSIT COMPANY (CDC). Why are shares unpopular among individual investors or a small number reflects people’s aversion to regulations?
On this subject, Talreja says that he does not buy this argument of 20 million users.
According to Talreja, these investment systems offer important reference bonuses that encourage existing users to find new ones and the chain continues. “Nevertheless, users of these programs / cryptos are certainly higher than stock market investors. This is an easy investment experience in cryptos than shares, the account being opened in minutes – and also without tax on profit.”
Fahim supports the argument: “First of all, let us deepen this figure of 20 million. There are 20 million crypto users in Pakistan could be correct, but that does not mean that there are 20 million cryptographic investors in Pakistan.
The equivalent data for shares show that there are equity investors, then there are people who use the companies that these actions represent. »»
He says that it is not correct to compare the 20 million figures with investors on the stock market. “People use crypto for transaction purposes mainly in Pakistan, and that too, mainly for transactions on the black market or if they do not want to be in the banking system or pay taxes.
But people buy a crypto like an investment, Fahim explains: “It’s a totally different ball game.” Regarding people’s resistance to the adoption of actions, he said: “One of the reasons why people have not gone to actions is due to a lack of knowledge. Financial literacy remains low in Pakistan. Then, there is a general understanding that gold is the best investment or real estate, and people are going to nothing else of these two workers. ”
“Therefore, there are these preconceived biases in people that education can change.” According to Fahim, taxes also play a big role in the discouragement of new entrants, “there are taxes on capital gains and dividend taxes. This reduces people’s incentives to invest in the market. ”
When The news When he was asked if resistance to stock markets is influenced by the representation of actions in pop culture (films more focused on market accidents, Fahim added: “These documentaries are seen by people around the world. But again, that has not affected people in the United States or India; they still invest in the market.
“I think the reason is that there has not been enough education on the market. And I think that many companies modify this perception in Pakistan. Applications and startups promote long -term equity investments.”
“The crypto will also have investors because of its use, and if it is legalized, this figure of 20 million would increase. But it could have an opposite effect, because it would also rest under the tax net. And with that, the feeling of investment could change. ”
While the verdict remains mainly in favor of actions, Fahim adds a reflection after the fact: “[Investment] It depends on the stage of a person’s life, the appetite for risks, etc. If someone is close to retirement, he should have money in risk -free assets like gold.
“Young people should have much more in stocks because when they retire or when they want to make an important purchase like a house, they want to maximize their investment and this can be done through shares.”
