19 March 2018
Where are we in the Cycle?
Cyclical progress continues to depend on a stronger growth profile than
is currently anticipated with needed improvements in productivity outcomes
hard to foresee. Unusually constrained metal supplies, a weakening US dollar
and supportive monetary policies in all major economic regions - none of
which can be taken for granted - have dominated recent outcomes.
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Market Directions
As commodity market conditions became less supportive, mining and oil
and gas stocks toward the smaller end of the market lagged the larger market
capitalisation companies with a stronger connection to broader equity market
conditions. The Australian resources benchmark index has failed to get past
mid 2014 levels suggesting a lack of underlying impetus for a genuine
cyclical change in pricing.
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Portfolio Performance and Positioning
Portfolio returns in the past week reflected the disparity in
performance between the largest stocks and the smallest stocks in the sector
although, over the past four weeks, the relative performance has been in the
opposite direction. The macro portfolio has been tilted increasingly toward
the smaller end of the market where there is less correlation with broader
equity market conditions. A significant cash position remains. No further
changes have been 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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