17 September 2018
Where are we in the Cycle?
An already mature metal price cycle, with a rising likelihood that peak
metal prices were recorded in February 2018, is now hamstrung by falling
developing country currencies, disrupted trade flows, UK withdrawal from
Europe and China’s attempts to restructure its economy. Unusually prolonged
supply side constraints which have been offsetting the effect of weaker
demand growth are losing their impact as newly initiated production starts
to flow in some metal categories.
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Market Directions
Key sector equity and commodity price indicators are toward the lower
end of their levels from the past year with the exception of the prices of
the market leaders which continue to benefit from institutional asset
allocation decisions. The smallest stocks in the sector have been especially
leveraged to weakening background conditions over the past month. Among
mid tier stocks, declines have outstripped advances over the past six
months.
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Portfolio Performance and Positioning
Price variations have been minimal to date through September with
advances and declining stock prices more evenly split than in August. The
strongest gains in the past week occurred among the Phase II category stocks
where losses had been unusually large in the prior month. The macro
portfolio remains tilted toward advanced exploration efforts. No portfolio
adjustments were made.
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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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