KARACHI: Pakistan’s financial markets have been on a strong upward trend in recent months. The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged 84% in 2024, ending the year at 115,127 points, and has since climbed another 2.3% to reach 117,806.75.
Gold also showed impressive growth, closing 2024 at Rs272,600 with a gain of Rs52,600 and has since jumped 19.2% to Rs325,000.
While traditional assets like gold and stocks are performing well, Pakistan is also exploring cryptocurrencies. The formation of the Pakistan Crypto Council reflects the country’s growing interest in digital currencies.
But with so many options available, where should investors put their money?
What Experts Say About Investing in Gold, Stocks, and Crypto
Investment experts suggest that portfolio diversification is key.
1. Stocks: The Best Long-Term Investment?
According to Topline Securities Director Shankar Talreja, Pakistan’s stock market has significant growth potential over the next 12 months.
He explains:
- The market is currently valued at 5.5 times the earnings multiple but historically trades at 7 times.
- This suggests a potential 27% upside, and with a 10% dividend yield, total returns could reach 35-40%.
Investment banker Mustafa Fahim also believes stocks should make up 60-70% of an investor’s portfolio. He recommends investing in index funds for stability. Over time, the stock market has provided an annualized return of around 20%, making it a strong investment choice.
2. Gold: A Safe Haven but Lower Future Returns?
Gold is traditionally considered a “safe asset” during economic uncertainty.
However, experts warn that its future returns may not match the past year’s growth. Talreja notes that the price of gold crossing $3,000 per ounce raises concerns, and future returns may be lower.
According to MENA Equities analyst Muhammad Usman Siddiqui, gold remains a stable option, but he believes stocks are more affordable and offer better returns in Pakistan.
He suggests a portfolio allocation of:
- 50% in gold
- 40% in stocks
- 10% in crypto for exposure
3. Crypto: High-Risk, High-Reward?
Cryptocurrency is gaining traction in Pakistan, but it remains a high-risk investment.
Although Chainalysis ranked Pakistan 9th on the Global Crypto Adoption Index 2024, experts remain cautious.
Fahim advises that young investors with higher risk tolerance could invest around 10% in crypto, mainly in Bitcoin since it is the most stable cryptocurrency.
However, crypto remains unregulated in Pakistan, making it a risky choice for conservative investors.
Why Do More Pakistanis Invest in Crypto Than Stocks?
Despite 20 million Pakistanis reportedly using crypto, the stock market has only around 324,952 individual investors, according to Central Depository Company (CDC).
Experts believe this is due to:
- Easier access to crypto (no complex account opening process)
- No taxes on crypto profits (unlike stocks, which have capital gains and dividend taxes)
- Lack of financial education about stock investments
Fahim believes that better education and tax incentives could encourage more Pakistanis to invest in the PSX instead of unregulated crypto schemes.
Final Verdict: Where Should You Invest?
Experts suggest:
- Long-term investors should focus on stocks (especially blue-chip companies).
- Gold should be part of the portfolio but mainly as a stabilizing asset.
- Crypto is high-risk and should be a small part of the portfolio, ideally for young investors who can handle volatility.
For more insights on investment opportunities in Pakistan, visit Pakistan Stock Exchange (PSX).
What do you think? Where would you invest your money? Let us know in the comments!