2 April 2018
Where are we in the Cycle?
Cyclical progress continues to depend on a stronger growth profile than
is currently anticipated. The better productivity outcomes needed to spur
an improvement in growth remain hard to foresee without government policy
commitments. Unusually constrained metal supplies, a weakening US dollar and
supportive monetary policies cannot be counted on for future support.
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Market Directions
The majority of stocks in the sector remain cyclically depressed despite
generally more supportive funding conditions for higher risk businesses.
Sector returns for the March quarter were negative. Near term uncertainties
about trade policy have risen as a risk to growth with the potential to
damage commodity price momentum. Equity prices have been underperforming
related commodity exposures.
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Portfolio Performance and Positioning
Portfolio returns in March and over the March quarter exceeded the
market benchmark. Phase I stocks led the development stage performance
rankings in the past week. The macro portfolio remains tilted toward the
smaller end of the market where there is less correlation with broader
equity market conditions but where volatility is typically higher. A
significant cash position remains. No further changes have been made to the
models in the past week.
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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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