Global Stock Rout Prompts Call for Back-to-Basics Investing

Traders unnerved by a selloff that hit stocks and bonds alike are looking for refuge, increasing the appeal of investments offering reliable returns such as shares that pay steady dividends.

A rout that’s 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 like high-dividend shares, investment-grade bonds and Chinese stocks.

Investors are hoping the assets they buy will withstand any fallout from an expected accelerated pace of interest-rate hikes by the 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,” said Peter Garnry, head of equity strategy at Saxo Bank A/S. “These themes are commodities, defense, logistics, cyber security and mega caps.”

Meanwhile, BlackRock Inc.’s Karim Chedid, head of the investment strategy team and senior strategist for iShares EMEA, said they prefer stocks that can navigate persistent inflation and more difficult margins, like healthcare and tech and generally defensive sectors with consumer price inelasticity.