18 June 2018
Where are we in the Cycle?
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 of cyclical
progress. Weak productivity outcomes among advanced economies and structural
impediments among developing economies are evident headwinds to the
advancement of an already mature cycle.
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Market Directions
Metal prices were falling at the end of the week as the US dollar moved
higher and nervousness about growth was compounded by the threat of a tot
for tat trade dispute between the USA and everyone else. Resource sector
equity prices were little changed for most of the week until late on the
last day. The smallest stocks in the sector were noticeably weaker after
making up some lost ground in the prior week. More...
Portfolio Performance and Positioning
Phase II companies led returns in the week (although they continue to
lag the earlier and later development stages for the month to date) without
any obvious common theme linking those that were strongest. In line with
the broader market, the earliest stage companies in the portfolio were among
the weakest performers. The macro portfolio remains tilted toward the
smaller end of the market and advanced exploration efforts where there is
less correlation with broader equity market conditions. A significant cash
position remains.
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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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