6 August 2018
Where are we in the Cycle?
Weak productivity outcomes among advanced economies and structural
impediments among developing economies are evident headwinds to the
advancement of an already mature cycle. Uncertainties over trade
restrictions are putting corporate investment decisions at risk at a
critical juncture. A range of adverse influences is edging the cycle toward
a tipping point.
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Market Directions
The downward trajectory of precious and industrial metal prices
continued. US trade policies have been blamed although signs of momentum
loss were evident since the first weeks of 2018. All key resource sector
stock segments posted losses with the exploration end of the market now
showing the heaviest losses over the past three months despite having made
up some lost ground in recent weeks.
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Portfolio Performance and Positioning
Portfolio outcomes in the past week reflected losses across the sector
including a range of Phase I companies displaying stronger leverage to
weaker cyclical conditions than the large stocks in the sector. The macro
portfolio remains tilted toward the smaller end of the market and advanced
exploration efforts where there is less correlation with broader equity
market conditions. No changes to the portfolio models have been suggested.
A modest cash position remains.
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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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