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State's business values surge on the back of low Covid cases, booming economy


The market value of Queensland companies listed on the ASX grew to $135 billion in September, a 15 per cent jump in three months and the highest month-end level on record, according to Deloitte.

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The report found its Queensland index was helped by the state’s success in shutting out Covid, but was also helped along by $3.3 billion in merger and acquisitions in the September quarter.

“Since inception in September 2002, the Deloitte Queensland Index has outperformed major global indices, such as the FTSE 100 and S&P/ASX All Ordinaries, and has weathered the storm of the GFC and the Covid-19 pandemic,” Deloitte said.

“The market capitalisation of Queensland-listed companies has increased by more than six times since September 2002 – from $18.5bn to the current $135.2bn.”

Deloitte partner and Queensland mergers and acquisitions leader Rob McConnel, said the record result had been largely driven by the continued recovery of the Queensland economy.

The state was enjoying unemployment falling to its lowest rate in more than a decade, record housing construction up almost 30 per cent, buoyed by low interest rates and government incentives, consumer and business confidence returning to pre-pandemic levels.

There was also a strong infrastructure investment pipeline, including an eye on the 2032 Olympics, supporting the medium-term outlook.

“The increase was also largely supported by the significant rebound in the state’s energy and resources sector, driven by surging commodity prices and the rising demand for lithium and renewable energy solutions,” McConnel said.

“The September quarter 2021 also saw a continued recovery in the share price performance of consumer-focused stocks, reflecting improved market sentiment fuelled by elevated Covid-19 vaccinations rates and the announcement of federal and state re-opening plans.”

Queensland merger and acquisitions activity also exceeded pre-pandemic levels, with 81 announced deals in the third quarter to the value of $3.3 billion, and highlighted by Anchorage Capital Partners sale of Affinity Education to Quadrant Private Equity for approximately $650 million.

“The private equity market remains a significant source of deal activity, with unprecedented levels of ‘dry powder’ estimated earlier this year at around $14 billion ready to deploy, forecast low global interest rates in the medium term, and optimism of a post-pandemic world, leading us to see extremely competitive bidding processes with very high multiples being offered,” McConnel said.

“This also follows a bumper quarter in Q2 2021, when 97 transactions were announced with a total value of $4.5 billion, and which marked the highest quarterly announced transactions in Queensland since 2016.

“Queensland has been so successful in managing the ongoing threat of Covid-19, and while we the process of opening up has commenced, some of the virus-induced barriers due to border closures, as well as the emerging threat of new variants, continue to pose real risks for the state when it comes to the outlook and sustaining economic growth.”

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