Report Date: 12 October 2015
Where are we in the Cycle?
Large commodity price rises left the metal price cycle in much the same
position as it had been for several months as the rises recovered only a
tiny proportion of lost ground. A further global growth downgrade from the
IMF left the sector at risk of having to reduce its estimates of raw
material demand.
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Market Directions
There were no fundamental improvements to warrant higher commodity and
equity prices during the week with markets appearing to react to the Federal
Reserve decision not to raise interest rates. Without a firmer base, the
greater willingness to buy risk is unlikely to persist.
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Portfolio Performance and Positioning
Large market gains were reflected in double digit percentage increases
in all three portfolio segments. The large cash holding meant the
macro portfolio model underperformed the benchmark (just as it had
outperformed strongly in September while the market was weakening). Several
stocks were re-weighted to take account of price changes.
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Stock Reviews and Rating Analysis
Antilles Oil and Gas (AVD:AU) has lined up funding for a
Peruvian onshore oil exploration property. Onshore exploration comes at a
fraction of the cost of offshore drilling but also offers a binary outcome
which suggests that a portfolio of opportunities is the best course for an
investor with the right risk appetite. The Antilles Oil and Gas rating
review has been updated recently.
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