Gold outshines market, gives over 40pc return in 2022: report

KARACHI: Gold was the top-performing asset class in 2022 with a return of more than 40 percent, followed by one-year dollar-denominated Naya Pakistan Certificate (NPC), and the US currency, a local brokerage report stated on Tuesday.

The NPC remained on second with a return of up to 36 percent and the holders of the US dollar in cash were listed on third with 28 percent return. Topline Securities presented the report on asset classes that were widely followed by local investors and savers in 2022. “These asset classes provided better returns compared to estimated average consumer price index inflation of 20 percent in outgoing calendar year 2022,” the brokerage said in a client note.

According to the report, Gold posted a gain of 41 percent in 2022 rising from Rs108,200/10gram to Rs152,700/10gram, after gaining 11 percent in 2021. In the local sarafa/bullion market, gold rallied in line with an increase in the US dollar rate in the black market. Currently, the precious metal is valued at black market parity rather than the official rate, which is 10 percent lower, it said.

In the international market, gold remained more or less stable in 2022, the report added.

The holder of US dollar NPC under Roshan Digital Account (RDA) also made 36 percent in Pak rupee terms on a falling value of the rupee.

Similarly, holders of the cash dollar made a gain of 28 percent in 2022 as the official bank rate of the US dollar rose from 177 at end of 2021 to 226 now.

“It was observed that a lot of investors transferred their capital to fixed-income instruments in 2022 due to rising interest rates. Policy rate in Pakistan increased from 9.75 percent to 16 percent in 2022,” the brokerage report said.

Following that, the 3-month T-Bill average gain was 14 percent in 2022, and the local money market funds also generated a 14 percent average return in 2022, it added.

The report said the return on bank deposits (excluding current account) and special saving certificate issued by the government was 11 percent on average in the outgoing year.

“Most famous and widely followed property sector was also affected in 2022 due to macroeconomic concerns. Indices tracking houses, plots and residential property were up 12-14 percent in 2022.” The country’s weak external account situation, rising interest rates, and political uncertainty led to lower interest in equities and bonds. The government bond prices fell due to rising policy rate. Benchmark 10-year Pakistan Investment Bonds posted a negative return of 2 percent (inclusive of 8 percent coupon) in 2022.

Stock market along with equity funds under-performed other major asset classes in 2022 with the benchmark KSE 100 Index falling 10 percent, the report revealed.