- Gold rises 19.2% after the gain of RS52,600 in 2024.
- KSE-100 of PSX rose 84% in 2024, the rally continues.
- Crypto is still high risk, suitable for younger investors.
Karachi: Pakistan’s financial markets have seen a upward trend sustained in recent months.
The KSE-100 reference index of the Pakistan Stock Exchange (PSX) increased by 84% in 2024, ending the year with 115,127 points, and since then another 2.3% has risen to reach 117,806.75, according to The news.
Gold also delivered strong yields, closing 2024 at RS272.600, a gain of RS52,600, and since then it has shot in 19.2% to RS325,000.
In the midst of this action for traditional assets, Pakistan is also venturing into emerging sectors. The establishment of the Crypto Council of Pakistan reflects the country’s intention to adopt cryptocurrencies, a movement welcome by several financial experts.
As financial markets see a shake, investors can find themselves by questioning how to diversify their investment portfolio to make the most of the upward markets. The most important thing, what should you choose: gold, actions or cryptocurrencies?
In your conversation with The newsMustafa Fahim, an investment banker who works in the Middle East, says that although “it is a great thing that Pakistan is adopting the cryptographic movement and the class of cryptographic assets, the three assets should be part of the portfolio of an investor.”
He says that the assignment of assets depends on the temporal horizon, age and risk appetite. “If someone is young, they can have a greater proportion of their investment in cryptography (for example, about 10%), which is high since cryptography is a highly volatile asset, and the investor that seeks decent and relatively stable yields should not have much in its portfolio.”
But Fahim advises investors to have a majority of their investment in shares, especially index funds, in the Pakistani stock market.
Recognizing the inherently volatile nature of the shares, the investment banker adds that “volatility is not high, especially when someone is investing in index funds because they invest in stable actions such as the large companies of Pakistan. Throughout the years, the stock market has given an average annualized yield of around 20%, which is good.”
Fahim advises to maintain a large part of the investments, around 60-70%, in the shares, which, according to him, will increase more in the future.
Shankar Talreja, Topine Securities Research Director, believes that Pakistan’s actions have “much better space to act in the next 12 months.” He says that IMF review will further improve the general confidence of investors.
“Currently, our market is valued in 5.5 times the multiple of profits, and historically, the market has negotiated 7 times the profits. This provides 27%rise, and with the 10%dividend yield, the total yield can be around 35-40%.” Talk explains.
On gold, talreja says that the price of more than $ 3000% of ounce guarantees some caution, and in Pakistan, the gold return constitutes an appreciation in international gold prices and the movement of our currency.
“Then, in my opinion, the return of gold in the next 12 months would be much lower than the last 12 months. In general, gold is considered a safe refuge in times of uncertainty,” he said.
Muhammad Usman Siddiqui, a research analyst who covers Mena shares, also sees gold as a stable option in times of uncertainty, calling Gold the kind of preferred assets for investors. He says that given the current global economy and uncertain political situation, such as the Russian-Ukraine War, most investors are inclined to gold.
In the last 30 days or so, “we have seen investors get money from shares and investing in safer assets [like gold]”Since it tends to work well during inflation and the highest recession.
He points out that while gold is safer, actions are the best option in Pakistan. According to Siddiqui, the shares are much more affordable, since investors can buy shares in blue chip companies at relatively cheap rates. “In my opinion, the assignment of assets could be: 50% gold, 40% of variable income and a small part in cryptography, only for exposure.”
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 kind of assets, especially for those who can use their retirement savings or pension funds for investments.”
Young investors with greater risk tolerance can assign a small portion to cryptography. “But still, I would go with the investment philosophy of the old school, which are the actions, the stock market and gold.”
For the stock market, it advises investors to choose blue chip companies, since they have less volatility in their profits and income and are more likely to resist any wind against economic and political front.
On the affordability, a small investor based in Karachi, who requests anonymity, echoes the Siddiqui argument. He says that for investment in gold, investors would need “millions of rupees. While, in the shares, the negotiation trip could start from a lower amount.” He adds that one can enter crypto and values markets with only RS100,000.
According to him, there is still uncertainty about cryptography, “if the government takes the legalization of the currency seriously, it would be a great addition. Investors should have the ease of rope in their bank accounts for cryptographic trade.”
For Fahim, gold is a safe and stable asset, but it should not dominate an investment portfolio, since its yields are relatively modest. He says that “while in the last two years, gold has had decent increases, around 40%, if we observe its annualized performance in the last 20-30 years, its performance has not been as high as investors could obtain in shares, or even cryptography.”
The assignment of Fahim assets is: the priority must be the actions for long -term growth, followed by gold as a stabilizer asset, and then cryptography as a high -risk option and high reward. Within Crypto, “Bitcoin is a better option because it is the original digital currency.” He thinks that “Bitcoin is here to stay.”
“Gold must be in the wallet but as a class of stabilizer assets, in the case of any liquidity problem, gold can be easily liquidated,” he explains.
Talrej also advises caution with respect to cryptocurrencies. “Although [crypto’s] The adaptation ratio is increasing, it is a highly volatile and high -risk investment class without clarity about its performance expectation during the next 12 months, at least for me. ”
Although experts and financial investors do not lean towards cryptographic, unofficial figures say there are about 20 million cryptography users within the country registered in different exchanges. The firm of the Blockchain analysis analysis firm classified Pakistan Ninth in its global cryptographic adoption index 2024.
In contrast, stock market participation remains low, with 324,952 individual and 9,685 corporate accounts, according to the central deposit company (CDC). Why are actions unpopular among individual investors or a low number reflects the aversion of people to regulations?
On this, Talrico says that it does not “buy this argument of 20 million users. Today, many investment options with links to crypts are being promoted, and nobody knows if it really is a cryptographic investment or something else.”
According to Talric, these investment schemes offer significant reference bonds that encourage existing users to find new ones and the chain continues. “However, the users of these schemes/crypts are safeer than investors in the stock market. It is an easy investment experience in crypts than in the shares, and the account is opened in minutes, and neither taxes on profits.”
Fahim supports the argument: “First, let’s deepen this 20 million figure. There are 20 million cryptography users in Pakistan could be correct, but that does not mean that there are 20 million cryptographic investors in Pakistan.
The equivalent data for the shares show that there are shares of shares and then there are people used by the companies that represent those shares. “
He says that it is not correct to compare the 20 million figure with investors in the stock market. “People use cryptographic for transaction purposes mainly in Pakistan, and that also, mainly for black market transactions or if they do not want to be in the banking system or pay taxes. Here where cryptography is used a lot, and that is why it is being purchased and selling.”
But they are people who buy cryptography as an investment, Fahim explains, “that is a totally different ball game.” In the resistance of people to adopt actions, he said: “One of the reasons why people have not gone towards actions is due to lack of knowledge. Financial education is still low in Pakistan. Then, there is a general understanding that gold is the best investment or real estate, and people do not go for anything other than these two assets.”
“Therefore, there are these preconceived biases in people that education can change.” According to Fahim, taxes also play an important role in discouraging new participants, “there are taxes on capital gains and dividend taxes. This reduces people’s incentive to invest in the market.”
When The news When asked if the resistance to stock markets is influenced by the representation of pop culture actions (more focused on market accidents, Fahim added: “Those 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 in the market. And I think many companies are changing this perception in Pakistan. Applications and new companies are promoting investments on long -term actions.”
“Crypto will also have investors due to its use, and if legalized, this figure of 20 million would grow. But it could have an opposite effect, because it would also be under the fiscal network. And with that, the feeling of investment could change.”
While the verdict remains mainly in favor of the actions, Fahim adds a last moment idea: “[Investment] It depends on the life stage of a person, risk appetite, etc. If someone is close to retirement, they must have money in assets without risks such as gold.
“Younger people should have much more in actions because at the time they retire or for the time they want to make a large purchase like a house, they want to maximize their investment and that can be done through actions.”
