7 March 2022

Remuneration Report Analysis and Commentary: PortfolioDirect scores annual remuneration reports from ASX listed companies against a consistent analytical framework designed to help assess which reports are most worthy of shareholder support. 
Contents

Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, one is ‘green’, three are flashing ‘amber’ and one has turned ‘red’, as the impact of the central bank liquidity surge and accompanying fiscal compensation for the effects of government lockdown mandates lessens. Upgraded growth forecasts for 2021 had been concealing a tendency for weakening underlying growth through the course of the year and into 2022 as sluggish pre-pandemic growth drivers resume their primary roles.  Supply side constraints in metal markets remain a positive influence on cyclical conditions. The cyclical positioning has been characterised as near a peak and at risk of moving into a ‘downswing’ phase.      More...

Market Directions
The speculative capital flows connected to retail investors and supporting sector equity prices is being threatened by the withdrawal of unprecedentedly supportive monetary conditions, surging inflation and the risk of a widening war in Europe.  While heavily hyped energy storage innovations are stoking interest and favourably impacting sector funding, they are yet to affect demand meaningfully.  Rising metal price risk premiums due to geopolitical fears stoking price volatility are not benefitting related equity prices.   Persistence of a 1990s-style investment performance - when modest sector equity price gains occurred in the midst of sometimes highly disruptive macro conditions - remains the underlying theme.        More...

Portfolio Performance and Positioning
Gains across all three development categories broke a run of weekly losses as metal prices moved higher in the aftermath of the Russian invasion of Ukraine.  The majority of  Phase I stocks, in the category which relies most on the most risk friendly investors, made losses.  Prior to the Russian invasion, the global inflation surge and threatened interest rate rises had already rebalanced the risk outlook among retail investors. Phase I companies continue to benefit from discovery opportunities uncorrelated with market conditions.  Although further along the development path, Phase II companies remain among the riskiest investment options due to their indebtedness, heavy reliance on execution success and need for strong global economic conditions to initiate sales.  Performance within the Phase III category is more likely to be driven by institutional allocations.  Portfolio models remain biased to the Phase I stock category with cash positions reflecting the cyclical risks.     More...

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. More...

Although the statements of fact in this report have been added from and are based upon sources the authors of the report believe to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed.  To the extent permitted by law, the authors of the report are not liable for any loss or damage arising as a result of reliance placed on the contents of this report.  

All opinions and estimates in this communication constitute judgments by the authors at the report date and are subject to change without notice.  The report publisher is under no obligation to make public any change in view about any matter referred to in this document.    

No references to past investment performance should be taken to indicate anything about future performance.

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