14 May 2018
Where are we in the Cycle?
Global economic growth might have already peaked during a surge in the
latter part of 2017. Beneficial effects will linger but 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 moved higher after concerns about growth were shrugged
off as being less important than earnings. The largest companies with
current earnings have benefitted most with little impact on companies at the
small end of the market. Australian listed companies will have benefitted
from the recent weakening in the Australian dollar although increasingly
disparate 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
The market bias favouring the largest stocks in the sector was once
again reflected in the portfolio performance resulting in the macro
portfolio lagging the benchmark. Phase II companies showed the highest
returns. The macro portfolio remains tilted toward the smaller end of the
market where there is less correlation with broader equity market
conditions. 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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