3 September 2018
Where are we in the Cycle?
Weak productivity outcomes among advanced economies and structural
impediments among a large number of developing economies are evident
headwinds to the advancement of an already mature metal price cycle, with a
rising probability that peak metal prices were recorded in February 2018.
Evident global metal demand weakness has been offset by unusually prolonged
supply side constraints.
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Market Directions
The downward trajectory of precious and industrial metal prices slowed
although a directional bias to the downside remains. Signs of momentum loss
in industrial metal prices, evident since the first weeks of 2018, have been
aggravated by US trade policies and worrying signs of developing economies
suffering the consequences of currency losses. Metal related equity prices,
in Australian dollars, have benefitted from the decline in the Australian
dollar which has been caught up in the flight from developing country
currencies.
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Portfolio Performance and Positioning
Investment returns were little changed in the past week with advances
and declines among portfolio stocks equally split. Phase III stocks were
marginally ahead of the other development categories. The macro portfolio
remains tilted toward advanced exploration efforts which can benefit from
leverage to any improvement in cyclical conditions as well as discovery
news. No portfolio adjustments were made.
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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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