23 April 2018
Where are we in the Cycle?
International Monetary Fund forecasts have flashed warning signs that
global economic growth might have already peaked. The better productivity
outcomes needed to spur an improvement in growth remain hard to foresee.
Uncertainties over trade restrictions are putting corporate investment
decisions at risk at a critical juncture in the cycle as supply constraints,
monetary conditions and exchange rates are less supportive.
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Market Directions
The largest stocks in the sector led gains in the past week and appeared
the most leveraged to the threats to metal supplies from sanctions against
Russian business interests. A clear divergence in performance between the
market leaders and the smallest stocks in the sector has emerged over the
past three months. In the Australian context, the resource sector equity
benchmark has outstripped the industrial index.
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Portfolio Performance and Positioning
The portfolio performance has reflected the market moves with Phase III
companies running significantly ahead of stocks at earlier stages of
development. Overall portfolio results lagged the benchmark index. The
macro portfolio remains tilted toward the smaller end of the market where
there is less correlation with broader equity market conditions but where
volatility is typically higher. A significant cash position remains. No
changes were 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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