Stock market emerges as top performer in major asset classes in 2023

After lagging for the last few years, the stock market outperformed other popular investment options and asset classes for local investors in 2023, such as the US dollar, gold, government securities, and real estate, according to a research note shared by Topline Securities on Saturday.

Market emerged as the highest return provider, as the benchmark KSE 100 Index, which tracks the performance of the 100 most liquid companies listed on the PSX, surged by 53%. The gain was inclusive of dividends received by shareholders during the period (until December 22). 

The index closed at 61,705.09 points on December 22, 2023, up from 42,323 points at the start of the year. 

The holders of the Naya Pakistan Certificate (NPC), a dollar-denominated savings scheme launched by the government for overseas Pakistanis under the Roshan Digital Account (RDA) initiative, earned 33% in rupee terms, due to depreciation of local currency, and remained second after the equities.

The US dollar, which had been a favourite choice for many Pakistanis in the past few years, provided a return of 25% gaining from Rs226 to Rs283 in the interbank market and 21% from Rs236 to Rs285 in open market. However, even after adding the interest income from a one-year term deposit, the dollar returns were lower than the stock market returns, it added.

Government securities, which attracted a lot of attention in 2023 due to the high interest rates offered by the central bank, also delivered a handsome return of 23% for the investors who invested in the three-month treasury bills and reinvested them every quarter.

Gold, another traditional safe haven asset, posted a decent gain of 18% in rupee terms, as the price of the yellow metal increased from Rs157,836 per 10 grams to Rs186,900 per 10 grams in the local market. In the international market, gold also rose from US$1,826 per ounce to US$2,065 per ounce in 2023.

Many investors also opted for fixed income low risk avenues in 2023, such as bank savings accounts, national savings schemes, and money market funds. The average bank saving rate remained at 17% in 2023, while the National Savings 3-year Special Saving Certificate (SSC) provided a gain of 13%. 

The local asset management companies’ money market funds generated an average return of 20% in 2023.

Real estate, which had been a sluggish sector for a long time, also showed some signs of recovery in 2023, especially in Karachi, the largest city and the financial hub of the country. 

The brokerage firm used data from Zeeman.com, a leading online property portal, and analyzed that the prices of houses, residential plots, and commercial plots in Karachi increased by 6-29% in 2023, depending on the location and the size of the property.