22 April 2019
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’ and three
‘amber’. The cyclical positioning has been classified as ‘downswing’ with
global growth decelerating, a loss of output momentum in China, the largest
national user of metal, and less supportive monetary policy settings than
have prevailed for most of the post-2009 period.
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Market Directions
Investors are pricing equities as though realisation of evident downside
risks is unlikely. Pivotal to the improved equity markets has been a switch
in central bank thinking about the appropriateness of their policy
settings. Against the trend in headline equity indices, metal prices and
related stock prices lost momentum during the past week. Leaders continue
to outperform the vast bulk of companies within the sector. Prices of
explorers remain anchored near historically low levels.
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Portfolio Performance and Positioning
Performance among selected portfolio stocks reflected broader sector
weakness with similarly sized losses across all development categories. The
portfolio remains weighted in favour of Phase I companies to take advantage
of discovery opportunities, the historically depressed state of this part of
the market and the ongoing cyclical risk which is likely to affect most
detrimentally the largest stocks in the sector. No changes were been made to
portfolio models.
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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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