Pakistan’s Investment Shock: Is Crypto the Real Threat to Gold and Stocks?
By News Room – Updated April 3, 2025, 11:20 AM GMT+0
As Pakistan grapples with a transformative phase in its financial markets, investors are confronted with a pressing question: where should they place their money? With stocks soaring, gold reaching record highs, and cryptocurrency emerging as a potential game changer, the choices for investment are both varied and complicated. Experts are voicing their insights on the risks and rewards associated with each asset class as increasingly more Pakistanis seek to navigate this dynamic financial landscape.
A Booming Stock Market
In the last year, the Pakistan Stock Exchange (PSX) has experienced phenomenal growth, with the KSE-100 Index soaring by an incredible 84% in 2024, a trend that shows no signs of slowing down. According to investment banker Mustafa Fahim, this remarkable performance has cemented the position of stocks, particularly those of blue-chip companies, as a primary choice for long-term investment. Fahim recommends that investors allocate 60-70% of their portfolios to stocks, asserting that the market still has substantial upside potential. Analysts project further returns, estimating that investors could see an additional 35-40% gain within just a year, a remarkable opportunity that gold may struggle to compete against.
Gold: A Traditional Safe Haven
Historically regarded as a safe haven during uncertain times, gold has always attracted investors, and its recent performance underlines this trend. Currently, gold prices have surged past Rs325,000 per tola, showcasing its allure as a stable investment. However, some analysts, including Shankar Talreja, caution that the rapid rally in gold prices may be stalling. While gold can provide a layer of stability to investment portfolios, its long-term returns have consistently lagged behind those of stocks. Talreja suggests that over-reliance on gold could lead investors to miss out on potentially higher earnings from equities.
The Crypto Conundrum
Adding another layer of complexity to the investment narrative is the emerging cryptocurrency market. Despite existing outside of formal regulations in Pakistan, cryptocurrency has garnered significant attention, with reports estimating that around 20 million Pakistanis engage with digital assets. Many of these users are not traditional investors but instead utilize cryptocurrency for transactions, often in an effort to bypass banking restrictions.
The opinions on cryptocurrency investment remain divisive among experts. Talreja expresses concerns about the extreme volatility associated with crypto, while Fahim proposes that, due to their risk tolerance, younger investors could consider allocating a small portion—around 10%—of their portfolios to digital assets. Bitcoin, due to its relative stability as a leading cryptocurrency, is often viewed as a safer option within the volatile crypto landscape.
The Literacy Gap in Financial Investment
A significant barrier to more extensive investment in stocks is the comparatively low level of financial literacy among the general public. In Pakistan, there exists a well-entrenched belief that gold and real estate are the most prudent forms of investment, which may inhibit individuals from exploring the potential benefits of the stock market. Additionally, tax implications surrounding stock investments further deter many from participating.
Fahim notes that while the figure of 20 million cryptocurrency users in Pakistan is impressive, it may not accurately reflect investment strategies, as many engage with digital currencies for practical reasons rather than investment pursuits. He suggests that if the government were to legalize cryptocurrency, increased adoption could follow, but potential taxation could also alter investor sentiments significantly.
Guidance for Investors: Making the Right Choice
In evaluating investment choices, the consensus begins to emerge that what works best varies widely among individuals. Those seeking stability might find gold to be a suitable option. Meanwhile, investors aiming for consistent growth are likely to favor stocks as their investment vehicle of choice. Lastly, for those prepared to tolerate high levels of risk for potentially high rewards, a modest investment in cryptocurrencies could be viable.
Ultimately, the right decision hinges on individual risk profiles, financial goals, and a growing awareness of market opportunities. As the financial landscape in Pakistan continues to evolve rapidly, adaptability will be vital for investors hoping to navigate this transformative period successfully.
News Room is the editorial team of CoinfoMania, dedicated to delivering reliable crypto news, market insights, and comprehensive analysis. With a global network of over 30 journalists, we strive to keep you informed on all significant developments in the blockchain space.
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