16 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 are putting corporate
investment decisions at risk at a critical juncture in the cycle as supply
constraints, monetary conditions and exchange rates are less supportive.
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Market Directions
The smaller end of the resources market has been losing ground as risk
appetite ebbs within the sector and, with the exception of commodities
affected by anti-Russian economic sanctions, commodity prices drift from
their recent cyclical highs. Larger resources companies have made strong
gains against industrial sector stocks within the Australian market.
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Portfolio Performance and Positioning
Phase II stocks performed poorly in the past week dragging portfolios
lower as the prices of the best established larger companies rose. Overall
portfolio results lagged the benchmark index. 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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