Report Date: 9 November 2015
Where are we in the Cycle?
More signs of metal price weakness came after good economic news
in the USA confirmed the likelihood of further rises in the U.S. dollar (and
consequential downward pressure on U.S. dollar denominated commodity
prices). Updated copper market modelling has raised the prospect of a
possibly larger than anticipated build-up in inventories over coming years. More...
Market Directions
Equity markets appeared to take a strong monthly U.S. employment
increase in their stride in contrast to the near panic reaction evident on
earlier occasions on which fears arose about a Federal Reserve interest rate
rise.
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Portfolio Performance and Positioning
Sector prices began to edge lower. Model portfolio positions were
reduced in several stocks that had shown strong recent performance and
appeared most at risk of at least a partial retracement in their prices. The
macro model cash position was rebuilt as a consequence having been lowered
in recent prior weeks.
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Stock Reviews and Rating Analysis
Perseus Mining (PRU:AU) is a relatively mature Phase II
company having a well-established production base with growth opportunities
in the foreseeable future. The PortfolioDirect valuation
analysis points to its asset value exceeding the market value of the company
with positive value momentum in future years to underpin market returns. In
common with many companies in the sector, the valuation is very sensitive to
movements in the gold price with only a very modest fall pushing the
valuation beneath the current market value highlighting a reason for the
reticence among investors to extrapolate current profit margins into share
prices.
For recent company reports...