21 January 2019
Where are we in the Cycle?
The PortfolioDirect cyclical guideposts have been downgraded to two
‘red’ and three ‘amber’. The cyclical positioning has been classified as
‘downswing’ with global growth decelerating, a loss of output momentum in
China and the emergence of less supportive monetary policy settings.
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Market Directions
A post-Christmas recovery in equity prices has helped carry resource
sector prices higher. Mining stocks at all stages of development have
benefitted although this has occurred at a time of rising concerns about the
global growth outlook. Higher corporate bond prices have contributed to the
more favourable view of the sector, especially those requiring funds. Lower
bond yields have lifted gold prices which have combined with a downward bias
to the Australian dollar to improve the valuation of Australian gold
equities.
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Portfolio Performance and Positioning
Reflecting broad market trends, all portfolio segments have shown gains
over the first days of January with the earliest stage companies producing
at least as strong a performance as the more established producers, although
early stage companies would have normally displayed stronger leverage to
improved underlying economic conditions, if they were actually the driver of
better performance. A relatively large weighting in Phase I companies had
been retained . No portfolio changes have been recommended.
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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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