MORNING MARKET REPORT

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1 THURSDAY, 29 MARCH 2018 SUMMARY Bulls retreat beneath the 5,800 level Overnight direction mixed as the Easter break draws near Overnight trading started off mixed after an early surge from the U.S. stock market has left the intraday outlook somewhat directionless. Yesterday, the Australian share market sank into a sea of red, with the index continuing to feel the pressure from the bears as they weigh on the market into the late afternoon. It was only towards the end of the session that the market recaptured its bullish charm and staged a modest advance, although at this point, not convincing of upholding. Assessing the technical implications, plus the close beneath 5,800 level has heightened the bearish sentiment. The S&P/ASX 200 Futures had another somewhat volatile session overnight, after the whip-saw prices action staged a drop to 5,755 low before advancing to 5,804 high. This week has been all about Facebook. The crisis began on March 16 after Facebook said it was suspending data analysis company Cambridge Analytica for allegedly harvesting data from more than 50 million Facebook users. Cambridge Analytica worked on Donald Trump's presidential campaign. Since then, Facebook's stock has plunged a whopping -18%, wiping out nearly $80 billion from the social networking giant's market value in the process. Mark Zuckerberg's net worth has fallen by about $14 billion. (He is still worth $61 billion, though). MARKET OVERVIEW ASX200 5, % SPI Futures (Jun 18) 5, % S&P 500 2, % Nasdaq 6, % Oil (WTI) $ % Iron Ore $ % Spot Gold US$1, % AUD/USD US$ % BTC/USD $7, % In earlier comments, U.S. Commerce Secretary Wilbur Ross warned that there would be limitations on Chinese investment in the U.S., which added emphasis that the U.S. government is considering restrictions on Chinese investment in sensitive U.S. technology like semiconductors and 5G wireless communications. Yesterday, Information Technology & Healthcare weighed on the market, along with significant declines seen for Materials, Energy and Consumer Discretionary names. The mining sector remains under pressure, despite firmer metals prices seen recently. Most of the iron ore miners were weaker after iron ore prices plummeted -1.7% in late Asian trade, yesterday. Local miner, Fortescue Metals Group (FMG) remained under pressure after falling by % to $4.37. The Titans, BHP lost -1.1% to $28.67, and Rio Tinto (RIO) fell -1.04% to $73.39, while South 32 (S32) shares were down -1.22% at $3.24. This morning, the benchmark S&P/ASX 200 index is expected to be a slow start, as the market unwinds for the Easter weekend break. Although a close under 5,800 for the week would give further bearish concerns. Back in Sydney, investors appear to have taken a guarded approach to stocks ahead of the long weekend (Easter break) in the face of the recent volatility.

2 In the Markets U.S. tech shares back under the microscope as further pressure emerges Overnight, the U.S. equities switched in and out of gains as the market struggled to find direction, although did briefly see a whips-saw rally, before declining. It was mainly the U.S. tech stocks that were under pressure again. After one of their worst one-day drop seen this week on Tuesday, several of the so-called Faang (Facebook, Apple, Amazon, Netflix, Google) shares fell further as a mix of regulatory inquiry and a more defensive mindset from investors left them out of support. Iron ore rebounds, but weak momentum suggests it may not last Iron ore spot markets rebounded earlier in the week after several days of heavy losses, assisted by a recovery in Chinese steel prices during the session. However, with Chinese futures ended mixed which may indicate that the bounce is unlikely to continue. According to Metal Bulletin, the spot price for benchmark 62% fines rose 1.3% to $65.17 a tonne, logging only its fifth gain in the past 21 sessions. It was the most significant percentage gain in two weeks, trimming its loss from March 1 to 17.9%. Shares in Apple, still the largest company on the stock market, by late afternoon in New York had fallen by nearly -0.5% to $167.49, Amazon was lower by -4% at $1, and video-streaming service Netflix sunk to almost -3.5% to $ There was, however, still mixed views on Facebook as its shares rose by +0.8% to $153.41, after tumbling over -5% percent after Bank of America Merrill Lynch reduced its price target on the stock for the second time in five days. The S&P 500 is now down 2.2 percent for the year, and down nearly 10 percent below the high of it reached on Jan. 26. The stock finished up on a mixed note with the Dow Jones Industrial Average was down 9.29 points, or -0.04%. The S&P 500 Index was weaker by -0.29% at 2,605, and the NASDAQ Composite fell -0.85%, to 6, Crude oil prices sink lower with the $62.50 still within range to the challenge! Overnight, was not the most bullish of price action as the crude oil prices settle weaker after data revealed that the U.S. oil supplies resumed their expansion, while domestic producers continued to raise output, threatening OPEC and its allies efforts to curb excess stockpiles. Inventories of U.S. crude rose by million barrels for the week ended March 23, confounding expectations for a decline of 287,000 barrels, according to data from the Energy Information Agency (EIA).

3 The build in crude inventories comes amid a slowdown in refinery activity which tends to reduce demand for crude as refiners remained in a period of maintenance. Despite the three-day decline in oil prices so far this week, the bears still lurk after the recent rejection of the critical resistance at $ Technical outlook - Profit-taking appears to be evident since the retreat from the $ key resistance. From the decline, the pattern is expected to strengthen. Therefore, should see the current pullback to either $ or $ Gold bears gather in numbers as the US Dollar rallies The precious yellow metal plummeted 23 dollars overnight, from $1,346 to $1,323, after the US Dollar unexpectedly surged from the upbeat release of the U.S. economic growth report. With easing geopolitical uncertainty reduced, has lightened the safe-demand. The rally in the USD overnight fuelled the index from a low of to an The release of the (GDP) Gross domestic product increased by a +2.9% annual rate in the October-December period, the Commerce Department said in its final estimate on Wednesday, beating a previous estimate of +2.5%, and economists expectations for a +2.7% increase. The U.S. Dollar Index measures the greenback s strength against a trade-weighted basket of currencies. Fading geopolitical uncertainty, temporarily, has reduced investor appetite for safe-haven gold in the wake of reports that North Korean leader Kim Jong Un vowed to commit to de-nuclearization amid talks with China s Xi Jinping. U.S. President Donald Trump welcomed the news of progress following the talks between the two leaders in Beijing. In a tweet, President Trump said, Received message last night from Xi Jinping of China that his meeting with Kim Jong Un went very well and that Kim looks forward to his meeting with me, Technical outlook: The $1,340 break overnight has now reopened the bearish direction to the region of $1, With the support crushed at now supports the Australian Dollar to the bearish case of The Australian Dollar is trading lower and now beneath the critical support level at The bearish sentiment has heightened overnight due to the US Dollar strengthening across the board, after a better-than-anticipated U.S. Gross Domestic Product (GDP) earlier in the session. After the Easter break, this Tuesday, the Reserve Bank of Australia is scheduled to release its interest rate decision, as well as the meeting s statement. It is widely expected that the RBA will keep rates on hold, although the market will still be keen to see what the report may reveal. It anticipated that the market would be looking for any hawkish tone. So, with the level at crushed, the bears do appear keen to take prices lower. The immediate target holds to , with the foreseeable target holding to the measured move of , before position squaring/profit-taking. Search engines are starting to provide an add-on to stop Facebook tracking your online activities. It has been reported that Mozilla is capitalizing on the recent fears over Facebook privacy and data by creating a new Firefox extension that stops Facebook from tracking your online activities. The new Facebook Container creates a blue-colored browser tab that isolates your Facebook session from the rest of your web activity. It is designed to prevent Facebook from collecting what sites you visit and targeting you with ads and other messages, (very similar to Google). If you click a link on Facebook, it will simply load in a new tab that s isolated from the Facebook Container, and if you click Facebook share buttons on any other sites, then it will load them within the special blue tab. Facebook s ad tracking technology allows the company to know when you ve been shopping for items and present ads for those products directly on Facebook.

4 STOCK PICKS Company Buy / Sell Called at Last Price Price Target % from call Time Frame BUD Buy $0.175 $0.165 $ % Suspended D20 Buy $1.095 $1.13 $ % Short Term AUR Buy $0.065 $0.068 $ % Short Term AD8 Buy $3.14 $3.20 $ % Short Term AIA Sell $5.79 $5.85 $ % Short Term NAN Sell $2.69 $2.61 $ % Short Term EVN Sell $2.87 $3.11 $ % Short Term TPE Sell $1.54 $1.48 $ % Short Term Stock Picks on our Radar (A pick of shares we think investors should be getting excited about) Previous week s radar picks have been added to this week outlook Others, we still view as potential buys. Nearmap Ltd (NEA, formerly Ipernica Limited), Mayne Pharma Group Limited (MYX), Scentre Group (SCG), Cannindah Resources Limited (CAE, formerly Planet Metals Limited), and Paladin Energy Limited (PDN). The Bulls Stocks tipped to rise Company Overview Buddy Platform Limited (BUD, formerly Potash Minerals Limited) provides first data aggregation, management and control platforms for the IoT and connected devices. Buddy advances the Quantified Economy by providing the infrastructure by which businesses and organizations can, in real time, access and analyse the data generated by connected devices. Buddy Platform is headquartered in Seattle, Washington, with offices in Adelaide, Australia. Technical outlook Viewing the daily chart timeframe for Buddy Platform Limited (BUD, formerly Potash Minerals Limited), technically has the potential to take the share price to the region of $0.26. We believe that any pullback to this share will be limited to the support seen from $0.12. Company Overview - Duxton Water Limited (D2O) presents an opportunity to invest in Australian Water Entitlements (also known as water licenses or water rights) - perpetual rights to Australia's limited water supply - a key production input into a number of agricultural industries. D2O generates regular and predictable revenue streams via Water Entitlement leases to primary producers. Technical outlook The outlook for Duxton Water Limited (D2O) appears to have further ground to cover the potential target seen to $1.22 before profit-taking is likely to emerge. The short-term support (buy zone) is viewed from $1.02. Company Overview - Auris Minerals Limited (AUR, formerly RNI NL) is a West Australian mineral exploration company with a primary focus on copper-gold projects in Western Australia. It has also acquired Chunderloo area. Technical outlook We believe from a technical perspective that this share has bottomed out (formed a base) from $0.04 and is currently forging building a potential rally in the region of $0.14. Reassess from there.

5 Company Overview - Audinate Group limited (AD8) is the provider of professional audio networking technologies globally with approximately four times the market adoption of its closest competitor. Dante is Audinate's technology platform that distributes digital audio signals over computer networks. Audinate's solutions are utilized across thousands of installations within the professional AV market, which includes the Sound Reinforcement, Broadcast, and Recording segments. Technical outlook Technically, things are slowly looking exciting for Audinate Group limited (AD8). We believe this share is in the midst of a potential bull rally! If momentum increases (as we expect) then this could see this share advance to $3.46. Reassess from there. Buying opportunity is viewed from $2.86. The Bears Stocks tipped to fall Company Overview - Auckland International Airport Limited (AIA) owns and operates the Auckland International Airport. It is New Zealand's largest airport and handles approximately 70% of all the country's international visitors - over 13m passengers annually. AIA also owns and operates various retail, commercial and industrial properties. Technical outlook The rejection of $6.00 region recently, now sets up a potential pullback for this share. That said, the broader perspective does hold to a positive bias. Therefore, the bearish sentiment is expected to be short-lived. The immediate target is envisaged from $4.46 before any buy signal is likely emerging. Resistance is likely to hold from the recent rejection area of $6.00. Company Overview - Nanosonics Limited (NAN) is involved in the manufacturing and distribution of the Trophon EPR ultrasound probe disinfector and its associated consumables and accessories. It is also engaged in research, development, and commercialization of infection control and decontamination products and related technologies. NAN is headquartered in Sydney, Australia with offices in the USA (Nanosonics Inc) and Europe (Nanosonics Europe GmbH) Technical outlook Nanosonics Limited (NAN) is expected to stage a mild pullback this week to $2.40. It is at this level we view as a buy zone due to the given technical implications. Therefore, we consider that a reversal is pending and may soon expect prices to stage a bull-run from $2.40 to $2.80. Company Overview - Evolution Mining Limited (EVN) is a gold mining company focusing on mining and exploration operations in Australia. It owns and operates five gold and silver mines in Queensland and Western Australia. Technical outlook With the risk events into this week (the Fed rate decision), could see spot gold pullback to $1,300. Therefore, we believe this share price has the markings for a mild decline also. We would prefer to wait until the level of $2.74 is challenged before the initial call to a buy. If reached, then a rebound is envisaged to $3.00. Company Overview - TPI Enterprises Ltd (TPE) is a licensed manufacturer and supplier of licit narcotics raw material to the global pharmaceutical sector. It currently exports narcotics to Europe, Africa, and the U.S. It also supplies culinary poppy seeds to the European food industry. Technical outlook We decided to hold this share for another week in our picks, as we believe a pullback is inevitable. Although little can be evaluated from the history, we think that this share may soon awake to any bearish decline. However, due to the previous weakness, we would first assess whether this share is a buy if the downside target is reached at $1.30. If so, then a rebound is envisaged to $

6 ECONOMIC CALENDAR Thursday Germany is to release preliminary inflation data. The UK is to publish a final reading on British growth data for the fourth quarter. In the U.S., weekly data on initial jobless claims and reports on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed's preferred metric for inflation, are on the agenda. Canada is to release data on the gross domestic product. Friday Global financial markets will stay closed for Good Friday. Disclaimer: Kaz Direct s services are provided by Kaz Capital Proprietary Limited ABN Australian Financial Services License No , Level 6, 88 Foveaux Street, Surry Hills NSW For information relating to our financial services you should refer to Kaz Capital s Financial Services Guide. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. There are risks involved in any financial investment and the value of any investment can and does fluctuate and may even become valueless. This research is based on information obtained from sources believed to be reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. Kaz Capital does not accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Unless otherwise noted, market and stock price outlook is taken from a technical perspective and seen from the oscillator s pattern being (Stochastic, MACD, RSI, and momentum), with no fundamental influence taken to these views.