25 January 2021

Remuneration Report Analysis and Commentary: PortfolioDirect scores annual remuneration reports from ASX listed companies against a consistent analytical framework designed to help assess which reports are most worthy of shareholder support. 
Contents

Where are we in the Cycle?
Where are we in the Cycle? Of the five PortfolioDirect cyclical guideposts, one is ‘red’, three are ‘amber’ and one is green.  Cyclical conditions have been disproportionately affected by the unprecedented surge in liquidity from central banks.  Commodity markets are at risk from an inevitably slowing monetary momentum, in the absence of other supporting factors.  Stronger anticipated growth for 2021, as a whole, conceals a tendency for weaker outcomes through the course of the year and for levels of global output to remain below 2019  outcomes. The cyclical positioning has been characterised as being near a peak and at risk of moving into a ‘downswing’ phase.       More...

Market Directions
A weakening US dollar and unprecedentedly expansionary monetary conditions have underpinned recent industrial metal price strength as well as a broader array of asset price gains, including for gold.  Strong speculative capital flows connected to retail investors are supporting sector prices and offsetting the negative effect on mining equities of physical market balances tilting into surplus due to a slowdown in demand.  Emerging energy storage innovations remain too far in the future to have an effect now on metal demand.  1990s style investment performance - when modest sector equity price gains occurred in the midst of sometimes highly disruptive macro conditions - remains the underlying theme.   More...

Portfolio Performance and Positioning
Phase II companies sprang to life even as Phase I stocks, which had been leading the sector performance, lost ground.  All development categories have benefitted from near term optimism about the world economy.  Improved market liquidity and a general willingness among retail investors to take speculative risks have given added impetus to the earliest stage companies. Phase I also offers uncorrelated returns from discovery opportunities. Gains among Phase II companies have, until the past week,  been relatively modest for the risks incurred, since these are among the most indebted firms in the sector and heavily reliant on execution success.  Portfolio models are biased to the Phase I stock category. Cash positions have been reduced recently to accommodate greater exposure to uranium exposed companies and a small number of Phase II companies which had lost ground against the sector.       More...

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. More...

Although the statements of fact in this report have been added from and are based upon sources the authors of the report believe to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed.  To the extent permitted by law, the authors of the report are not liable for any loss or damage arising as a result of reliance placed on the contents of this report.  

All opinions and estimates in this communication constitute judgments by the authors at the report date and are subject to change without notice.  The report publisher is under no obligation to make public any change in view about any matter referred to in this document.    

No references to past investment performance should be taken to indicate anything about future performance.

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