4 December 2017
Where are we in the Cycle?
The industry is positioned in the latter stages of a cyclical trough
from where it would typically need a fresh source of economic growth to
carry it to the next stage of a cyclical upswing. While global growth
has improved and the attaching risks have diminished, sources of stronger
growth are highly limited by policy moves favouring a slowdown (e.g. Brexit,Chinese
lending constraints and tightening US monetary policy) rather than an
acceleration.
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Market Directions
Resource sector equities have lagged other market sectors despite the
improved global growth profile and more favourable excahnge rates
suggesting sector investors are more in tune with financial markets than
mainstream equity markets. Commodity price momentum has lost some
force although exploration stocks - which had been lagging the sector
performance - have attracted more attention and have been outperforming
other parts of the market in recent weeks.
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Portfolio Performance and Positioning
Portfolio gains during November were driven by stronger exploration and
development stock performances rather by the more mature and larger cap
alternatives in Phase III. Negative portfolio returns in the past week have
generally reflected across the board weakness in the sector. Minor
adjustments were made to the portfolio weightings in the past week which
retains a larg cash (or alternative asset) position in anticipation of
future stronger cyclical conditions.
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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.
For company reports
& ratings...
The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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