12 November 2018
Where are we in the Cycle?
None of the five PortfolioDirect cyclical guideposts are turned to
‘green’. The cyclical positioning has been reclassified as ‘downswing’ with
global growth decelerating and less supportive monetary policy settings.
Unusually prolonged supply side constraints which have been offsetting the
effect of weak demand growth are losing their impact as newly initiated
production starts to flow in some metal categories.
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Market Directions
Mining and oil and gas stocks finished the week lower despite moving
higher after the midterm elections in the USA with outcomes still also
dependent on changing expectations about a trade agreement with China.
Exploration stocks eked out a small gain to outperform the market leaders.
Metal prices were generally lower after seemingly peaking in February while
the slump in crude oil prices continued.
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Portfolio Performance and Positioning
Phase I and Phase III stocks once again made gains while the Phase II
companies again faltered. Phase II companies, typically at critical
junctures in their development paths and most sensitive to changes in
current conditions, have tended to perform least well to adversely affect
the macro portfolio performance. The relatively large weighting in Phase I
companies, which now have less downside risk due to having been omitted from
the earlier cyclical rally, has been retained. No changes have been made to
the portfolio models.
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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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