The State of the Deal and Deloitte Queensland Index - Q4 2022
February 2023
Welcome to The State of the Deal including the 195th edition of the Deloitte Queensland Index, a review of Queensland listed companies on the Australian Securities Exchange (ASX).
Deloitte Queensland Index
The Deloitte Queensland Index is a quarterly review of Queensland listed companies on the Australian Securities Exchange (ASX). It provides insights into the composition of the index, as well as market capitalisation movements of those included companies.
Despite concerns about the impact of continuing interest rate rises and fears of an economic slowdown, equity markets saw robust growth in Q4 2022, driven by resilient consumer demand and companies adapting to the new economic environment, bouncing back from Q2 and Q3 troughs. The capitalisation of Queensland listed companies in the Deloitte Queensland Index rose by 5.3% to $117.2b.
Our Queensland Economic Update covers the drivers of Queensland’s economy in 2022, including inflation, household consumption, population growth, commodity prices, employment levels and business sentiment; as well as an outlook for 2023.
Key highlights from the report include:
- The Deloitte Queensland Index grew by a healthy 5.3% to $117.2b: following Q2 and Q3 troughs, the Deloitte Queensland Index saw strong growth in Q4 as a result of resilient consumer demand. This was largely driven by the Financial Services, Consumer and TMT sectors, with other sectors experiencing smaller increases in market capitalisation, while the Energy & Resources sector experienced a small decline in Q4 2022.
- This quarter’s growth comes amid economic and political challenges: with inflation remaining stubbornly above the Reserve Bank of Australia target, interest rates continued to rise throughout Q4 2022, and further increases are anticipated in 2023. This resulted in higher debt costs of debt finance, and expectations of a decline in consumer spending. Additionally, the Australian Government put forward new legislation in Dec-22 setting a price cap on coal and gas, which is expected to impact Queensland energy producers, potentially disincentivising investments into the sector.
- M&A activity cooled down in 2022, but dealmakers are cautiously optimistic about opportunities in the current market: after a record breaking 2021, 2022 saw fewer M&A transactions amidst fears of a global recession and a high interest-rate environment. However, private equity and superannuation funds continue to contribute significant amounts of capital to transactions, as they adjust to the ‘new normal’ and look to invest in high-quality assets.
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