15 April 2019
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’ and three
‘amber’. The cyclical positioning has been classified as ‘downswing’ with
global growth decelerating, a loss of output momentum in China, the largest
national user of metal, and less supportive monetary policy settings than
have prevailed for most of the post-2009 period.
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Market Directions
The upward bias in equity prices continued, underpinned by expectations
of favourable central bank interventions. Miners benefitted from the
resulting drift toward growth investments. Sector leaders continued to
outpace the smallest stocks, the vast bulk of listed entities. Metal prices
have defied forecasts of slowing global growth helped by supply-side
constraints which have supported tighter market balances than would have
otherwise occurred.
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Portfolio Performance and Positioning
Phase I stocks in the portfolio models made up some lost ground after
successive weeks of underperformance but the relative gains were modest.
Established producers have continued to perform better than exploration
companies through April although a wide dispersion in Phase II returns has
persisted as differences in business practices and strategies play a role in
performance outcomes. The portfolio remains positioned to take advantage of
leverage to any improvement in cyclical conditions among historically low
priced exploration companies. No changes have been made to 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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