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17 Jan 2017 (AFR) – Fund tips new dawn for consumer stocks – Consumer staples stocks attractive as deflationary forces abate

(17 January 2017, AFR, p16, by Jonathan Shapiro)

‘Reece Birtles of $10 billion Australian equities manager Legg Mason Martin Currie says we’re about to enter a “great environment” for consumer stocks as deflationary forces abate and corporate profit margins expand. Stocks like  <snipped…>  stand to benefit from expanding profit margins as prices rise while costs are held steady, Mr Birtles said at a media briefing in Sydney on Monday. Mr Birtles said the past five years, which have been characterised by low inflation and falling bond rates, came about because of the sharp falls in commodity prices. But that started to change last year, as commodities began to rise and nominal GDP growth picked up. That should continue, which means bond yields will continue to rise, but more importantly, so too will corporate revenues.’

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