31 August 2020

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?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’, two are ‘amber’ and one is green.  ‘Trough Entry’ has been retained as the description of the cyclical positioning with ongoing downside risk to global growth expectations and a metal price term structure signaling abundant supplies. China’s improved growth momentum leaves the economy with ample excess capacity as demand falls in external markets.  The recent US dollar weakness is helpful but remains subject to COVID-19 uncertainties. Global monetary conditions are now offering unprecedented support.      More...

Market Directions
Rebounding equity prices in the leading US market are optimistically anticipating a quick resolution to earnings uncertainty and return to sustained economic expansion. A weakening US dollar and unprecedentedly expansionary monetary conditions have underpinned recent gold and industrial metal price strength as well as, more broadly, asset prices.  Pre-coronavirus global growth rates would have already been insufficient to absorb more quickly growing mine supplies.  Even with production losses, market balances are tilting into surplus.  A return to 1990s style sector investment performance - when modest sector equity price gains occurred in the midst of sometimes highly disruptive macro conditions - remains possible after public health risks are brought under control.   More...

Portfolio Performance and Positioning
Phase I stock returns continue to run ahead of those in the more advanced development categories. Returns among stocks in the Phase III category, driven by more general equity market conditions, have been less strong and less volatile than returns among Phase I or Phase II companies.  Phase II companies face the greatest risks from potential demand shrinkage as they are the most indebted in the sector and most likely to undershoot weakening market conditions.  Portfolio models remain biased to the Phase I stock category which has the strongest leverage to improved market liquidity because of the ongoing need among smaller companies to replenish working capital.  Cash positions remain elevated.      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.

This communication is directed only to Australian wholesale investors and licensed financial advisers for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of a security.

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