GreenvalleyI think you touch on a very relevant point. The risk...

Greenvalley

I think you touch on a very relevant point. The risk free rate of return available to FCF investors in a bank account (6.5%) combined with the presumed lack of growth available in listed industrials (due to flat revenue lines) and the unstable macro environment has made investing more capital in equities currently unattractive to both retail and institutional investors.

Overseas funds are showing a preference for fixed returns via AUD denominated corporate bond offers. Mum and Dad investors don't see the additional 1.5-2% yield premium as currently offered by secondary industrials over fixed deposits as enough to justify the added risk of potential capital loss.

This is a core headwind facing the ASX. Any rate rises will exacibate this issue, by increasing the Risk free rate of return, and at the same time placing more pressure on consumers making it easier for them to justify the current consumption strike - which makes it hard for companies to drive the revenue line.

As you mention quite easy to find solid companies with low debt/equity ratios, strong EPS and dividend history trading under 9x earnings paying yields of 8% or better. The trick is picking the ones that will find some growth momentum or benefit most from an eventual change of business conditions.