2 January 2019
Where are we in the Cycle?
The PortfolioDirect cyclical guideposts have been downgraded to two
‘red’ and three ‘amber’. The cyclical positioning has been classified as
‘downswing’ with global growth decelerating, a loss of output momentum in
China and the emergence of less supportive monetary policy settings.
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Market Directions
Highly volatile equity prices have persisted as worries about slowing US
and global economic growth have coincided with concerns that the view of the
US economy held by the Federal Reserve may be too optimistic, raising the
chance of a 2019 recession. A European Central Bank commitment to stop
buying securities, as regional growth is slowing, also signaled a transition
in policy settings. The leading mining stocks continue to hold up relatively
well despite the growth uncertainties as some of the more growth oriented
companies which took markets higher have faced the brunt of the recent
selling surge.
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Portfolio Performance and Positioning
Early stage companies continue to perform poorly. Phase III stocks
posted positive returns for December even as global equity markets fell
dramatically. The relatively large weighting in Phase I companies had been
retained to take advantage of their potentially strong leverage to positive
changes in sentiment at the bottom of the cycle, leaving the overall
portfolio results lagging the Phase III dominated benchmark.
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Stock Reviews and Rating Analysis
PortfolioDirect rating reports analyse the quality and risk
attributes of proposed mineral developments. Rating criteria apply to mining and oil and gas stocks at any stage of
development. PortfolioDirect uses a five point rating
scale to measure the risk adjusted quality of proposed mineral developments
or companies.
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The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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