20 August 2018
Where are we in the Cycle?
Peak metal prices were recorded in February 2018. Weak productivity
outcomes among advanced economies and structural impediments among
developing economies are evident headwinds to the advancement of an already
mature cycle. Uncertainties over trade restrictions are putting corporate
investment decisions at risk at a critical juncture. A range of adverse
influences is edging the cycle toward a tipping point.
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Market Directions
The downward trajectory of precious and industrial metal prices
continued. US trade policies have been blamed although signs of momentum
loss in industrial metal prices were evident since the first weeks of
2018. Metal related equity prices began to reflect the recent sharp metal
price losses largely removing the earlier evidence of scepticism among
equity investors that cyclical conditions had actually worsened. All
development segments in the sector were displaying losses.
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Portfolio Performance and Positioning
A large majority of Phase I, Phase II and Phase III stocks produced
losses in the past week reflective of the broader move in the key sector
benchmark. 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. No portfolio adjustments were made. The
cash position has increased slightly.
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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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