The State of the Deal and Deloitte Queensland Index - Q1 2023

Investor concerns regarding rising interest rates, slowing economic growth, global financial system instability and high inflation underpinned the performance of global equity markets throughout Q1 2023. Despite these concerns, the Deloitte Queensland index experienced a modest 1.8% increase in Q1 2023, highlighting the resilience of the Queensland economy in the face of increasing headwinds.

Our Queensland Economic Update explores the key drivers of Queensland’s extended growth into the first quarter of 2023, including strong household consumption and a booming export market for the State’s natural resources which continue to benefit from favourable (albeit declining) commodity prices. Within this edition we also consider the impact of tightening monetary policy and rising energy prices on business and consumer sentiment, with rising cost-of-living pressures continuing to cloud the outlook for 2023.

Key highlights from the report include:

• The Deloitte Queensland Index grew by 1.8% in Q1 2023: the total market capitalisation of QLD-based ASX listed companies increased by $2.2b from 31 December 2022 ($117.2b) to 31 March 2023 ($119.4b). Consistent with the performance of the Deloitte Queensland Index since the peak of the pandemic, while the Index fell by 1.8% in the 12 months to 31 March 2023, it has continued to outperform the broader S&P/ASX All Ordinaries, which declined by 5.3% over the same period.
• Tilt to the Consumer sector: growth in the Deloitte Queensland Index in Q1 2023 was primarily driven by the strong performance of the Queensland Consumer sector, with the Lottery Corporation Limited (ASX: TLC) and Flight Centre Travel Group Limited (ASX: FLT) posting the largest dollar increases in market capitalisation, growing by $1.4b and $1.1b respectively, since 31 December 2022. This has resulted in a continued shift in the industry composition of the Index towards the Consumer sector. Refer to the report for further details of the top six performers from the Index in Q1 2023.
• Consistent with global M&A trends, Queensland M&A activity remained subdued in Q1 2023: Following a slowdown in the second half of 2022, Queensland transaction volumes in Q1 2023 (24 deals announced) were down 11% compared to Q4 2022, while total M&A value reduced to $0.8b (versus $2.7b in Q4 2022). Whilst dealmakers remain cautiously optimistic about the opportunities that the current market presents, there does appear to be continued friction between seller and buyer expectations in respect to values, with higher financing costs weighing on valuations.

Previous editions:

• Q4 2022
• Q3 2022
• Q2 2022
• Q1 2022
• Q4 2021
• Q3 2021
• Q1 2021
• Q4 2020
• Q3 2020

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