Evaluation of Personal Investment Strategies In An Emerging Market

Abstract

This paper evaluates the performance of the main financial assets that are available for retail investors in Kazakhstan and whether they provide protection against inflation. With monthly data for the years 2010–2024 across equities, gold, the USD/KZT exchange rate, S&P 500 returns in KZT, residential real estate, and bank deposits, the paper compares nominal and real returns and estimate inflation betas following Fama and Schwert (1977). The analysis is complemented by return spreads relative to KZT deposits, Sharpe ratios, and cumulative investment paths. The findings demonstrate that both in nominal terms and real terms, USD-linked assets, especially S&P 500 returns denominated in KZT, perform better than domestic alternatives. But none of the assets hedge expected or unexpected inflation; inflation betas are indistinguishable from zero or negative. In depreciation periods, real estate offers only partial short-term nominal protection and fails to preserve long-term purchasing power. The results document a lack of effective inflation-hedging instruments in Kazakhstan and highlight structural constraints facing domestic investors in a high-inflation, high-dollarization environment.