7 May 2018
Where are we in the Cycle?
Statistics from Europe and the USA are reinforcing assessments that
global economic growth might have already peaked during a surge in the
latter part of 2017. Uncertainties over trade restrictions are putting
corporate investment decisions at risk at a critical juncture in the cycle
as supply constraints, monetary conditions and exchange rates become less
supportive.
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Market Directions
Commodity prices have retreated from their peak values putting downward
pressure on the bulk of stocks in the resources sector. Australian listed
companies will have benefitted from the recent weakening in the Australian
dollar although significant currency moves across developing countries will
have affected companies differently depending on the locations of their
activities.
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Portfolio Performance and Positioning
Strong gains among the largest stocks in the sector were reflected in
the portfolio performance in April resulting in the macro portfolio lagging
the benchmark which is dominated by the largest companies in the sector.
The macro portfolio remains tilted toward the smaller end of the market
where there is less correlation with broader equity market conditions but
where volatility is typically higher. A significant cash position remains.
No changes were made to the models in the past week.
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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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