Value tough to realise while downgrades persist

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Value tough to realise while downgrades persist. It's pretty clear that at some point the yield trade will unwind and sectors like property, utilities and infrastructure, which have done remarkably well over the past few years, will suffer. The market will eventually wake up and realise that these sectors are pretty geared, have low returns on capital and low growth. That's why being 'more right than wrong' on the timing of interest rate moves is important and why we all obsess over them so much. Domestic cyclicals are a tougher call. There's apparent value in sectors like media and retail but until the downgrade cycle stops this value is likely to remain unrealised.

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