• Gold climbs 19.2% after RS52,600 gain in 2024.
• PSX’s KSE-100 up 84% in 2024, continues to rally.
• Crypto remains high -risk suitable for younger investors.
  

Karachi: Pakistan’s financial markets have seen a lasting bullish trend in recent months.

Benchmark KSE-100 index for Pakistan Stock Exchange (PSX) increased by 84% in 2024 and ended the year at 115,127 points and has since climbed an additional 2.3% to reach 117,806.75, according to The news.

Gold also delivered strong returns and closed 2024 to RS272,600 – a gain of RS52,600 – and has since risen by 19.2% to RS325,000.

In the midst of this performance with traditional assets, Vove Pakistan also into new sectors. The creation of Pakistan Crypto Council reflects the country’s intention to adopt Cryptocurrencies, a step welcome by several financial experts.

As the financial markets see a shaker, investors may find doubts about how to diversify their investment portfolio to make the most of the bullish markets. The most important thing of all, what should they choose: gold, stock or cryptocurrencies?

In his conversation with The newsMustafa Fahim, an investment banker working in the Middle East, says that even though “it’s a big thing that Pakistan embraces the Crypto Movement and Crypto Asset Class, all three assets must be part of an investor’s portfolio.”

He says asset allocation depends on time horizon, age and risk appetite. “If anyone is young, they can have a larger proportion of their investment in crypto (say about 10%), which is high as crypto is a very unstable asset, and the investor looking for decent and relatively stable return should not have much of it in their portfolio.”

But Fahim advises investors to have a larger proportion of their investment in shares, especially index funds, in the Pakistani stock market.

Recognizing the inherent unstable nature of shares adds the investment banker that “volatility is not high, especially when someone invests in index funds because they invest in stable shares such as large companies in Pakistan. Over the years, the stock market has yielded an annual average return of about 20%, which is good.”

Fahim advises to keep a large part of investment-oming 60-70%-in shares, which he says will increase the most in the future.

Shankar Talreja, director of research at Topline Securities, believes that Pakistani shares have “much better space to perform in the next 12 months.” He says the IMF review will further improve investors’ overall confidence.

“Currently, our market is valued at 5.5x by the earnings multiple, and historically the market has traded with 7x of earnings. This gives the 27%yield and with a dividend of 10%the total return can be around 35-40%.” Talreja explains.

At Gold, Valreja says the price of over $ 3000% ounces guarantees some caution, and in Pakistan, gold returns constitute both appreciation in international gold prices and the movement of our currency.

“So, in my opinion, the return on gold in the next 12 months would be much lower than the last 12 months. In general, gold is considered a safe haven in times of uncertainty,” he said.

Muhammad Usman Siddiqui, a research analyst that covers Mena shares, also sees gold as a stable opportunity in times of uncertainty calling gold the preferred asset class for investors. He says that given the current global economy and the uncertain political situation, just like Russia-Ukraine war, most investors are leaning against gold.

Over the past 30 days, ”we have seen investors withdraw money from stocks and invest in safer assets [like gold]“Since it tends to work well during higher inflation and recession.

He notes that although gold is safer, shares are the better choice in Pakistan. According to Siddiqui, stocks are much more affordable as investors can buy shares in blue-chip companies at relatively cheap prices. “In my opinion, the asset allocation could be: 50% gold, 40% shares and a small part in crypto – for exposure only.”

He adds that since Crypto is not yet a developed asset in Pakistan in terms of regulation, “being a conservative investor, I would not recommend investing in this asset class, especially for those who can use their pension savings or pension funds for investment.”

Young investors with higher risk tolerance can award a small part to crypto. “But still I would go with the old school investment philosophy, which is stocks, stock market and gold.”

For the stock market, he also advises investors to choose blue-chip companies as they have less volatility in their earnings and revenue and are more likely to withstand all economic and political headwinds.

At affordable prices, a Karachi-based little investor who requests anonymity repeats Siddiqui’s argument. He says that for investments in gold, investors would need “millions of rupees. While the trade journey in shares could be started from a smaller amount.” He adds that you can enter the crypto and stock markets with only RS100,000.

According to him, there is still uncertainty about crypto, “if the government is serious about legalizing the currency, it would be a good addition. Investors should have easy to rope in their bank accounts for crypto trading.”

For Fahim, gold is a safe and stable asset, but it should not dominate an investment portfolio as its return is relatively modest. He says that “while over the past two years we have had decent increases-oming 40%if we look at its annual return in the last 20-30 years, it has not been as high as investors could get in stocks or even crypto”.

Fahim’s asset allocation goes: The priority must be shares for long -term growth, followed by gold as a stabilizing asset, and then crypto as a high -risk high -risk. In the field of crypto, “Bitcoin is a better option because it is the original digital currency.” He thinks “Bitcoin is here to stay.”

“Gold must be in the portfolio, but as a stabilizing asset class – in the case of liquidity problems, gold can be easily liquidated,” he explains.

Talreja also advises caution about cryptocurrencies. “Although [crypto’s] Adaptation conditions are rising, it is a very unstable and high-risk investment class without any clarity on its return expectation in the next 12 months, at least for me. “

Although financial experts and investors are not leaning against crypto, unofficial figures say there are about 20 million crypto trans in the country registered on various exchanges. Blockchain Analytics -Company Chainalysis ranked Pakistan ninely on its global crypto adoption index 2024.

In contrast, participation in the stock market remains low with 324,952 individual and 9,685 business accounts, according to Central Deposit Company (CDC). Why are stocks unpopular among individual investors, or reflect a low number of people’s reluctance to rules?

On this, Talreja says he does not “buy this argument of 20 million users. Today, many investment options are promoted with links to cryptos and no one knows if it is actually crypto investments or anything else.”

Per Palreja offers these investment schemes significant referral bonuses that encourage existing users to find new ones and the chain continues. “Nevertheless, users of these schemes/cryptos are definitely higher than stock market investors. It is an easy investment experience in cryptos than shares where the account is opened in minutes – nor do not tax on the profits.”

Fahim supports the argument, “Let’s first dig deeper into this 20 million numbers. There are 20 million crypto trans in Pakistan may be correct, but that doesn’t mean there are 20 million cryptoin vests in Pakistan.

The corresponding data for shares shows that there are equity investors, and then there are people who use the companies that these shares represent. “

He says it is not correct to compare 20 million figures with investors in the stock market. “People use crypto for mostly transaction purposes in Pakistan, and so too, mostly for black market transactions, or if they do not want to be in the banking system or pay tax. This where crypto is used a lot, and because of it is bought and sold and sold.”

But people buy crypto as an investment, Fahim explains, “It’s a completely different ball game.” On people’s resistance to embracing stocks, he said: “One of the reasons people have not gone against equities 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 do not go for anything else except for these two assets.”

“Therefore, there are these preconceived pre -income in people who can change education.” According to Fahim, taxes also play a major role in deterring new participants, “There are capital gains and dividend taxes. This reduces people’s incentive to invest in the market.”

When The news On the question of the opposition to stock markets, the influence of representation of shares in pop culture (films are more focused on market accidents, Fahim added: “These documentaries are seen by people around the world. But again, it has not affected people in the US 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 view in Pakistan. Apps and startups promote long -term stock investments.”

“Crypto will also have investors because of its use and if it is legalized, this 20 million numbers would grow. But it could have a reverse effect because it would also come under the tax network. And with that, investment mood could change.”

While the verdict mostly remains in favor of shares, Fahim adds a reflection: “[Investment] Depends on a person’s life stage, risk appetite, etc. If anyone is close to retirement, they must have money in risk -free assets like gold.

“Younger people should have much more in stocks, because when they retire or at the time they want to make a big purchase like a house, they want to maximize their investment and it can be done through shares.”