KARACHI: Following a years-long spell of bearish activity, the stock market re-emerged as the highest return provider in 2023 by outperforming all major asset classes.

A research note released by Topline Securities Ltd on Saturday said the benchmark of major shares listed on the Pakistan Stock Exchange gained 53 per cent, including dividends, in the outgoing year (until Dec 22).

The brokerage analysed the average returns that investors received in as many as 12 asset classes in 2023. The asset class that yielded the second-highest return in 2023 was the dollar-denominated Naya Pakistan Certificate under the Roshan Digital Account (RDA) scheme. It provided investors with a 33pc return in rupee terms mainly because of a falling value of the local currency against the greenback.

The third best asset class was real estate as the average prices of houses, residential and commercial plots in Karachi went up 6-29pc in 2023, the analysis showed while using data from real estate portal Zameen.com.

The dollar produced a return of 25pc in 2023 as it went from Rs226 to Rs283 in the interbank market. The appreciation in the dollar rate was 21pc in the open market where it rose from Rs236 to Rs285 over the same period. “If this amount was invested in a one-year term deposit at the beginning of the year, the gain would have increased to 29pc in the interbank market and 25pc in the open market, assuming a return of 4pc on dollar-denominated deposits,” it said.

Another highly profitable asset class in the outgoing year has been treasury bills. The government had to raise the interest rate to a record high of 22pc amid a tightening monetary policy to fight inflation. As a result, investors in treasury bills made a 23pc gain in 2023. The analysis is based on the assumption that the investment was in a three-month treasury bill that was reinvested every quarter.

Gold has provided above-average returns in the last few years to local investors. In 2023, its price rose from Rs157,836 per 10 grams to Rs186,900, providing an annual profit of 18pc. In the international market, its price increased roughly 13pc from $1,826 per ounce to $2,065 over the same period.

Many investors moved to fixed-income, low-risk investment avenues in 2023 owing to a high benchmark interest rate. Within the fixed-income market, the average bank saving rate remained 17pc in 2023. The profit rate offered by the National Savings on a three-year Special Savings Certificate remained 13pc. Money market funds offered by local asset management companies generated an average return of 20pc in 2023, the analysis showed.

Published in Dawn, December 24th, 2023