22 October 2018
Where are we in the Cycle?
Global growth is decelerating as monetary policy settings become less
supportive in an already mature metal price cycle. Unusually prolonged
supply side constraints which have been offsetting the effect of weak demand
growth are losing their impact as newly initiated production starts to flow
in some metal categories. None of the five PortfolioDirect cyclical
guideposts are turned to ‘green’.
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Market Directions
Mining and oil and gas stocks have been caught up in the broader equity
market decline although the sector has displayed a surprising resilience
against a backdrop of investor worries about the momentum of global economic
growth. Gold stocks have benefitted from the search for a safe haven after
gold prices rose slightly with the Australian gold sector receiving an added
benefit from a weaker Australian dollar.
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Portfolio Performance and Positioning
Gains among the Phase I stocks permitted a portfolio gain ahead of the
market benchmark during the week were less pronounced than the market
benchmark. Phase I stocks have shown greater resilience over the past four
weeks in part because they had participated least in the cyclical
improvement evident since the beginning of 2017. The Phase II companies,
typically at critical junctures in their development paths and most
sensitive to changes in current conditions, have tended to perform least
well. There were no suggested portfolio adjustments.
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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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