23 July 2018
Where are we in the Cycle?
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. Supply constraints, monetary conditions and exchange
rates, important cyclical commodity price props, had become less supportive
even before trade issues loomed as a danger to the cycle.
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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 were evident since the first weeks of 2018. The smallest stocks in the
sector made up some lost ground against the market leaders, consistent with
seasonal movements, but remain anchored near cyclical troughs without
benefitting significantly from recently improved cyclical conditions. More...
Portfolio Performance and Positioning
Portfolio outcomes in the past week reflected sector wide weakness
driven by increasingly pessimistic views of global growth. Performance
across portfolio segments was within relatively narrow bounds. 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. Relatively minor changes to the portfolio models have
been suggested. A modest cash position remains.
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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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