3 December 2018
Where are we in the Cycle?
None of the five PortfolioDirect cyclical guideposts are turned to
‘green’. The cyclical positioning has been reclassified as ‘downswing’ with
global growth decelerating and less supportive monetary policy settings.
Unusually prolonged supply side constraints which have been offsetting the
effect of weak demand growth are losing their impact as newly initiated
production starts to flow in some metal categories.
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Market Directions
Equity prices strengthened sharply during the week, amid wide intra-day
fluctuations, after expectations rose of a solution to the Sino-US trade
dispute and investors began reappraising the extent to which US monetary
policy will change during 2019. Widening judgements that global growth is
slowing has fed into financial, equity, metal and oil market outcomes as
clearer signs emerge of a change in cyclical positioning for major markets.
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Portfolio Performance and Positioning
Large negative returns across Phase II and Phase III companies have
reflected broader market trends. By the end of November, Phase I portfolio
stocks had managed a small positive change in defiance of the headline
benchmarks, contributing to a better than benchmark portfolio performance.
The relatively large weighting in Phase I companies, which now have less
downside risk due to having been omitted from the earlier cyclical rally,
has been retained No changes have been made to the portfolio models.
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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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