Equities underperform: cryptocurrency, best performing real estate asset classes – Business & Finance

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KARACHI: Among the major asset classes used by local investors, cryptocurrency and real estate remained the best performing asset classes in Pakistan in 2021, while Pakistani stocks underperformed all others asset classes in 2021, showing a return of 1.0% with 6 trading sessions remaining, analysts said. This remained well below the historic 30-year stock CAGR of 14%, they added.

The cryptocurrency, which is currently not officially recognized by Pakistan but used by many local investors, saw huge gains in 2021, said Umair Naseer of Topline Securities. Cryptocurrency flourished during the pandemic thanks to an influx of retail investors, huge availability of leverage, and a low transaction cost. The widely followed cryptocurrency Bitcoin rose 87% in 2021 in terms of PKR, he added.

The Pakistani real estate market also remained the best performer, gaining 23% according to the zameen.com plot price index. This was led by a series of incentives announced by the federal government and the central bank (SBP) to support the construction sector. In addition, the amnesty program, low taxes, the ability to park undocumented wealth, and the ability for Pakistanis to invest in housing through the Roshan Digital Account (RDA) have sparked great interest in the real estate industry. in 2021.

Pakistan’s weak external account and rising interest rates have resulted in lower interest in stocks which, despite decent returns in the first half of 2021, are expected to close flat in calendar year 2021. The KSE-100 index peaked in the first half of 2021 at 48,726 index level on June 14, 2021 and since then it has been down 9.0% due to concerns about Pakistani macros, he said. he declares.

Due to the pressures on the country’s external accounts situation, the pak rupee also depreciated by 11% against US $. So, US dollar holders made decent returns, while US dollar certificate holders from Naya Pakistan (Roshan Digital) also made 18 percent in terms of PKR. Gold also posted 10% gains in PKR in 2021, as investors continued to view gold as a safe haven amid uncertain economic outlook.

Yields on fixed income securities were lower than other asset classes due to higher yields. Average yields on 1-year treasury bills were 8.3 percent, the special 1-year savings certificate was 8.6 percent while the average rate on 10-year GDP was ‘amounted to 10.4 percent.

Copyright Business Recorder, 2021

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