9 April 2018
Where are we in the Cycle?
Cyclical progress continues to depend on a stronger growth profile than
is currently anticipated. The better productivity outcomes needed to spur
an improvement in growth remain hard to foresee without government policy
commitments. Uncertainties over trade restrictions could hinder corporate
investment decisions. Unusually constrained metal supplies, a weakening US
dollar and supportive monetary policies cannot be counted on.
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Market Directions
The majority of stocks in the sector remain cyclically depressed despite
generally more supportive funding conditions for higher risk businesses.
The smallest end of the market has continued to move lower after a strong
December quarter and as the commodity price momentum which raised investor
interest diminishes. Equity prices continue to underperform related
commodity exposures.
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Portfolio Performance and Positioning
Portfolio returns in the past week lagged the benchmark after a strong
relative gain in March. Phase I stocks were the weakest of the three
development phases into which the portfolio models are divided. 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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