Queensland Energy and Resources Index
Issue 12, December 2011 Quarter Edition
Welcome to Issue 12 of the Deloitte Queensland Energy & Resources Index (Deloitte Qld E&R Index), a review of Queensland companies listed on the Australian Securities Exchange (ASX) within the energy and resources industries. A summary of market movements and the quarterly league table can be viewed in the document below.
During the December 2011 quarter, the Deloitte Qld E&R Index increased 2.2%, while the ASX All Ordinaries increased 1.0% over the same period. This outperformance was largely driven by the strong return of PanAust Resources Limited (PanAust) and the resilience of New Hope Corporation Limited. In the 12 months to 31 December 2011, the Deloitte Qld E&R Index increased 25.9%, compared with a 15.2% decrease for the ASX All Ordinaries. This large annual outperformance was driven by the return of Macarthur Coal Limited, recently acquired by Peabody Energy Corporation Limited, which was formerly the second largest listing on the Deloitte Qld E&R Index.
The December 2011 quarter was dominated by the European debt crisis, as leaders moved from summit to summit attempting to derive a resolution. Despite making apparent progress on a 'haircut' deal for privately-held Greek sovereign debt in October, November tested the resolve of European politicians. Bond auctions showed that demand for new sovereign issues at sustainable rates had fallen away, with Italian long-term rates spiking above 7% - a level that previously led to bailout requests from peripheral nations – and Germany failing to sell a considerable portion of its debt. The market focussed its attention on the absence of a credible lender of last resort, as interbank lending markets all but froze and the cost of debt insurance hit levels not seen since the fall of Lehmann Brothers. On 9 December, another EU emergency summit was held in which a new 'stability and fiscal compact' was agreed between all EU members, bar the United Kingdom. This agreement places budgetary constraints on signatories, which also contain penalties if member states breach a certain deficit limit. Markets reacted in a lukewarm fashion, as economists widely panned the agreement for failing to allow the European Central Bank to operate as an effective lender of last resort and provided no path toward full fiscal union and joint debt issuance.
Chinese manufacturing numbers remained flat or negative throughout much of the quarter, leading to considerable falls in iron ore and coal spot prices. The US economy began to show positive signs of consistent recovery in December, with the unemployment rate coming down to a level not seen since President Obama's inauguration, and jobless claims decreasing. Domestically, the Reserve Bank decreased the cash rate by 0.25% for the second consecutive month, which appeared to buoy housing starts toward the end of the year.
There are currently 96 companies listed on the Deloitte Qld E&R Index. During the December 2011 quarter, 40 companies enjoyed an increase in market capitalisation during the quarter, while 52 companies decreased and the remainder were steady.
For information on the Index, please contact:
Analyst, Corporate Finance
Telephone: +61 7 3308 7389