Traders and investors unnerved by the sell-off that has hit stocks and bonds are looking for a safe refuge, increasing the appeal of “back-to-basics” investments that offer reliable returns, such as shares that pay steady dividends, according to financial experts.
The market rout, which has seen global stocks enter a bear market and so-called risk-free Treasuries slump, is forcing investors to get creative. They are looking at assets such as high-dividend shares, investment-grade bonds and Chinese stocks, they say.
Investors are hoping the assets they buy will withstand any fallout from an expected accelerated pace of interest rate hikes by the US Federal Reserve to tame inflation that’s climbing at the fastest pace in four decades.
“We are arguing for adjusting the portfolio to get those exposures that make sense in the current environment,” says Peter Garnry, head of equity strategy at Saxo Bank.
“These themes are commodities, defence, logistics, cyber security and mega caps.”
Meanwhile, Karim Chedid, head of BlackRock's investment strategy team and senior strategist for iShares EMEA, says they prefer stocks that can navigate persistent inflation and more difficult margins, such as health care and tech, and generally defensive sectors with consumer price inelasticity.
Here are some of the other assets that are attracting investors’ attention during the bear market:
Free cash flow stocks
The era of easy money with very low or negative real rates is clearly over, according to Ellen Hazen, chief market strategist and portfolio manager at FLPutnam Investment Management.
“It’s clear all that stuff we learn during our CFA [chartered financial analyst] exams and in business schools about how you value companies and this kind of cash flow, that matters again. And what that means is you want to own companies that are generating free cash flow,” Ms Hazen says during an interview on Bloomberg Television.
Health care, insurance and a few technology and software stocks in the S&P index generate a lot of free cash flow, which make them look appealing for FLPutnam, she says.
Dividend yield
Some investors are tweaking their dividend strategies.
High-dividend yielding stocks are the best place to hide, along with commodities and large caps, says Marija Veitmane, senior strategist at State Street Global Markets.
Central banks will keep raising rates as consumers and companies continue to have a lot of cash and access to still-cheap borrowing, she says. “This is a very negative outlook for stocks, so we would be sellers of any rally.”
Sat Duhra of Janus Henderson Investors has been adding to positions in mainland Chinese shares, including in the renewable energy infrastructure and water sectors, on attractive valuations as they will be paying out dividends in June and July.
The Singapore-based portfolio manager is investing in Asian companies with dividend yields of around 6 per cent to 8 per cent.
It “is a decent spread over bond yields and provides some protection in a period of heightened volatility”, he says.
Pricing power
HSBC Holdings has a list of stocks that tend to do well even in a weak macroeconomic environment, says Herald van der Linde, head of the lender's APAC equity strategy.
“These stocks can do that because their businesses have pricing power, or they operate in a special niche or are key players in highly concentrated markets.”
Meanwhile, now that Asian economies are reopening, JP Morgan Asset Management sees the outlook for domestic demand improving in the region.
Current earnings forecasts for Asian equities seem “too conservative for 2022 and valuation is also attractive once market sentiment improves”, Tai Hui, Asia chief market strategist at JP Morgan Asset Management, wrote in a recent note.
Investors can also find opportunities in stocks with pricing power, such as Sika, Geberit and Givaudan, says John Plassard, a director at Mirabaud & Cie, a Switzerland-based bank and wealth manager.
“With equity returns essentially bimodal and largely recession dependent, we focus on relative value opportunities and reassess our preferred themes and related screens,” UBS Group AG strategists, including Keith Parker, wrote in a note.
Some of the consumer staples companies are holding up given price elasticity for the strong brands
Louise Dudley,
portfolio manager at Federated Hermes
They are focusing on pricing power, stocks with higher and improving quality, as well as shares exposed to high-income consumers.
“Some of the consumer staples companies are holding up given price elasticity for the strong brands,” says Louise Dudley, portfolio manager at Federated Hermes, an investment management company in the US.
Stocks with stable dividend policies are havens and there’s value in health care and energy, she says.
Fabio Caldato, a partner at Olympia Wealth Management, also “built a decent bulk of healthcare companies and we are still buyers of the sector, with a strong focus on big European pharma” like GSK and Sanofi.
Meanwhile, Wells Fargo strategists, including Christopher Harvey, said in a recent note that they had screened for long ideas, using history as a guide for a recession portfolio that includes names such as Comcast, Coca-Cola and IBM.
China’s stocks
Now is a good time to buy so-called new economy stocks in China, including tech, despite the regulatory risk there, says Banny Lam, head of research at CEB International Investment Corporation.
“Lots of people one year ago thought this thing would be pushed like a more backward cycle for all the tech stocks,” says Mr Lam. “I am really positive about this sector, and in the second half of this year.”
Goldman Sachs, meanwhile, remains bullish on China stocks as the government is easing overall policies. The nation’s internet shares are still trading below their intrinsic value, Goldman Sachs strategist Kinger Lau wrote in a note.
Pictet Asset Management recently sold its China positions again because the zero Covid-19 policy is “too risky” and is underweight equities across the board right now in terms of geographies, says Frederic Rollin, senior investment adviser at the company.
Investment-grade bonds
High-rated bonds strike a good balance between income generation and resilience against slowdown concerns, according to JPMorgan’s Mr Hui.
While a short-term challenge for fixed income is risk from duration — a measure of debt price’s sensitivity to interest-rate moves, income generated from government and corporate notes offers a better cushion to offset price volatility from rising rates.
“Now is the time to start rebuilding fixed income exposure” as central bank tightening anchors long-term inflation expectations, says Nannette Hechler-Fayd’herbe, chief investment officer of international wealth management and global head economics and research at Credit Suisse.
“Core government bonds and high grade corporate credits are offering decent yields now and emerging market hard currency bonds [for example in USD] are outright attractive,” she says.
Five films to watch
Castle in the Sky (1986)
Grave of the Fireflies (1988)
Only Yesterday (1991)
Pom Poki (1994)
The Tale of Princess Kaguya (2013)
Summer special
Results:
6.30pm: Handicap (Turf) | US$175,000 2,410m | Winner: Bin Battuta, Christophe Soumillon (jockey), Saeed bin Suroor (trainer)
7.05pm: UAE 1000 Guineas Trial Conditions (Dirt) | $100,000 | 1,400m | Winner: Al Hayette, Fabrice Veron, Ismail Mohammed
7.40pm: Handicap (T) | $145,000 | 1,000m | Winner: Faatinah, Jim Crowley, David Hayes
8.15pm: Dubawi Stakes Group 3 (D) | $200,000 | 1,200m | Winner: Raven’s Corner, Richard Mullen, Satish Seemar
8.50pm: Singspiel Stakes Group 3 (T) | $200,000 | 1,800m | Winner: Dream Castle, Christophe Soumillon, Saeed bin Suroor
9.25pm: Handicap (T) | $175,000 | 1,400m | Winner: Another Batt, Connor Beasley, George Scott
Full list of brands available for Instagram Checkout
Adidas @adidaswomen
Anastasia Beverly Hills @anastasiabeverlyhills
Balmain @balmain
Burberry @burberry
ColourPop @colourpopcosmetics
Dior @dior
H&M @hm
Huda Beauty @hudabeautyshop
KKW @kkwbeauty
Kylie Cosmetics @kyliecosmetics
MAC Cosmetics @maccosmetics
Michael Kors @michaelkors
NARS @narsissist
Nike @niketraining & @nikewomen
NYX Cosmetics @nyxcosmetics
Oscar de la Renta @oscardelarenta
Ouai Hair @theouai
Outdoor Voices @outdoorvoices
Prada @prada
Revolve @revolve
Uniqlo @uniqlo
Warby Parker @warbyparker
Zara @zara
How being social media savvy can improve your well being
Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.
Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.
Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.
Torrena said that “most people believe that dieting and keeping fit is boring”.
However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.
“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.
People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.
Fatherland
Kele Okereke
(BMG)
UEFA CHAMPIONS LEAGUE FIXTURES
All kick-off times 10.45pm UAE ( 4 GMT) unless stated
Tuesday
Sevilla v Maribor
Spartak Moscow v Liverpool
Manchester City v Shakhtar Donetsk
Napoli v Feyenoord
Besiktas v RB Leipzig
Monaco v Porto
Apoel Nicosia v Tottenham Hotspur
Borussia Dortmund v Real Madrid
Wednesday
Basel v Benfica
CSKA Moscow Manchester United
Paris Saint-Germain v Bayern Munich
Anderlecht v Celtic
Qarabag v Roma (8pm)
Atletico Madrid v Chelsea
Juventus v Olympiakos
Sporting Lisbon v Barcelona
Keane on …
Liverpool’s Uefa Champions League bid: “They’re great. With the attacking force they have, for me, they’re certainly one of the favourites. You look at the teams left in it - they’re capable of scoring against anybody at any given time. Defensively they’ve been good, so I don’t see any reason why they couldn’t go on and win it.”
Mohamed Salah’s debut campaign at Anfield: “Unbelievable. He’s been phenomenal. You can name the front three, but for him on a personal level, he’s been unreal. He’s been great to watch and hopefully he can continue now until the end of the season - which I’m sure he will, because he’s been in fine form. He’s been incredible this season.”
Zlatan Ibrahimovic’s instant impact at former club LA Galaxy: “Brilliant. It’s been a great start for him and for the club. They were crying out for another big name there. They were lacking that, for the prestige of LA Galaxy. And now they have one of the finest stars. I hope they can go win something this year.”
Types of fraud
Phishing: Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
Smishing: The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
Vishing: The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
SIM swap: Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
Identity theft: Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
Prize scams: Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
* Nada El Sawy
UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
Venom
Director: Ruben Fleischer
Cast: Tom Hardy, Michelle Williams, Riz Ahmed
Rating: 1.5/5
Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
UAE%20Warriors%2033%20Results
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RACECARD%20
%3Cp%3E%0D%3Cstrong%3E9pm%3C%2Fstrong%3E%20Maiden%20(PA)%20Dh70%2C000%20(Dirt)%202%2C000m%0D%3Cbr%3E%3Cstrong%3E9.30pm%3C%2Fstrong%3E%20Handicap%20(TB)%20Dh70%2C000%20(D)%202%2C000m%0D%3Cbr%3E%3Cstrong%3E10pm%3C%2Fstrong%3E%20Al%20Ain%20Cup%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(D)%202%2C000m%0D%3Cbr%3E%3Cstrong%3E10.30pm%3C%2Fstrong%3E%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C800m%0D%3Cbr%3E%3Cstrong%3E11pm%20%3C%2Fstrong%3EWathba%20Stallions%20Cup%20%E2%80%93%20Handicap%20(PA)%20Dh70%2C000%20(D)%201%2C600m%0D%3Cbr%3E%3Cstrong%3E11.30pm%3C%2Fstrong%3E%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C400m%0D%3Cbr%3E%3Cstrong%3E12am%3C%2Fstrong%3E%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C400m%3C%2Fp%3E%0A
The specs
Engine: 2.0-litre four-cylinder turbo
Power: 268hp at 5,600rpm
Torque: 380Nm at 4,800rpm
Transmission: CVT auto
Fuel consumption: 9.5L/100km
On sale: now
Price: from Dh195,000
WHAT%20IS%20THE%20LICENSING%20PROCESS%20FOR%20VARA%3F
%3Cp%3EVara%20will%20cater%20to%20three%20categories%20of%20companies%20in%20Dubai%20(except%20the%20DIFC)%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20A%3A%3C%2Fstrong%3E%20Minimum%20viable%20product%20(MVP)%20applicants%20that%20are%20currently%20in%20the%20process%20of%20securing%20an%20MVP%20licence%3A%20This%20is%20a%20three-stage%20process%20starting%20with%20%5B1%5D%20a%20provisional%20permit%2C%20graduating%20to%20%5B2%5D%20preparatory%20licence%20and%20concluding%20with%20%5B3%5D%20operational%20licence.%20Applicants%20that%20are%20already%20in%20the%20MVP%20process%20will%20be%20advised%20by%20Vara%20to%20either%20continue%20within%20the%20MVP%20framework%20or%20be%20transitioned%20to%20the%20full%20market%20product%20licensing%20process.%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20B%3A%3C%2Fstrong%3E%20Existing%20legacy%20virtual%20asset%20service%20providers%20prior%20to%20February%207%2C%202023%2C%20which%20are%20required%20to%20come%20under%20Vara%20supervision.%20All%20operating%20service%20proviers%20in%20Dubai%20(excluding%20the%20DIFC)%20fall%20under%20Vara%E2%80%99s%20supervision.%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20C%3A%3C%2Fstrong%3E%20New%20applicants%20seeking%20a%20Vara%20licence%20or%20existing%20applicants%20adding%20new%20activities.%20All%20applicants%20that%20do%20not%20fall%20under%20Category%20A%20or%20B%20can%20begin%20the%20application%20process%20through%20their%20current%20or%20prospective%20commercial%20licensor%20%E2%80%94%20the%20DET%20or%20Free%20Zone%20Authority%20%E2%80%94%20or%20directly%20through%20Vara%20in%20the%20instance%20that%20they%20have%20yet%20to%20determine%20the%20commercial%20operating%20zone%20in%20Dubai.%C2%A0%3C%2Fp%3E%0A
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.3-litre%20turbo%204-cyl%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E10-speed%20auto%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E298hp%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E452Nm%3Cbr%3E%3Cstrong%3ETowing%20capacity%3A%20%3C%2Fstrong%3E3.4-tonne%3Cbr%3E%3Cstrong%3EPayload%3A%20%3C%2Fstrong%3E4WD%20%E2%80%93%20776kg%3B%20Rear-wheel%20drive%20819kg%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EPrice%3A%20Dh138%2C945%20(XLT)%20Dh193%2C095%20(Wildtrak)%3Cbr%3E%3Cstrong%3EDelivery%3A%3C%2Fstrong%3E%20from%20August%3C%2Fp%3E%0A
Liverpool 4-1 Shrewsbury
Liverpool
Gordon (34'), Fabinho (44' pen, 90' 3), Firmino (78')
Shrewsbury
Udoh (27'minutes)
Man of the Match: Kaide Gordon (Liverpool)
Switching%20sides
%3Cp%3EMahika%20Gaur%20is%20the%20latest%20Dubai-raised%20athlete%20to%20attain%20top%20honours%20with%20another%20country.%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EVelimir%20Stjepanovic%20(Serbia%2C%20swimming)%20%3C%2Fstrong%3E%0D%3Cbr%3EBorn%20in%20Abu%20Dhabi%20and%20raised%20in%20Dubai%2C%20he%20finished%20sixth%20in%20the%20final%20of%20the%202012%20Olympic%20Games%20in%20London%20in%20the%20200m%20butterfly%20final.%20%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EJonny%20Macdonald%20(Scotland%2C%20rugby%20union)%20%3C%2Fstrong%3E%0D%3Cbr%3EBrought%20up%20in%20Abu%20Dhabi%20and%20represented%20the%20region%20in%20international%20rugby.%20When%20the%20Arabian%20Gulf%20team%20was%20broken%20up%20into%20its%20constituent%20nations%2C%20he%20opted%20to%20play%20for%20Scotland%20instead%2C%20and%20went%20to%20the%20Hong%20Kong%20Sevens.%20%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESophie%20Shams%20(England%2C%20rugby%20union)%20%3C%2Fstrong%3E%0D%3Cbr%3EThe%20daughter%20of%20an%20English%20mother%20and%20Emirati%20father%2C%20Shams%20excelled%20at%20rugby%20in%20Dubai%2C%20then%20after%20attending%20university%20in%20the%20UK%20played%20for%20England%20at%20sevens.%20%0D%3C%2Fp%3E%0A
THE APPRENTICE
Director: Ali Abbasi
Starring: Sebastian Stan, Maria Bakalova, Jeremy Strong
Rating: 3/5
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
