I’ve just returned to Australia and have been enjoying the lovely sun and warmth of the southern spheres, which was in pleasant contrast to the icy cold northern experience from the European peninsulas that I had just left, until I was awoken from my New Year slumber by the events unfolding up in the Sunshine State. Unfortunately for Queensland, the dire weather has put much of the boom state under 3 to 4 meters of water with significant damages expected to tally up over the course of this month.

These things aren’t always easy to predict and control for and, unfortunately, early reports estimate a roughly $15 to $16 bn hit to the mainland economy (roughly 1% of GDP) could be part of the final bill. However, Australians being a reasonably chirpy lot, the mood remains buoyant, after all, it would be poor form for us to let down our ‘no-worries’ outlook.

Unless, that is, if you happen to be one of the unfortunate analysts who trumped up the potential for QR during its recent ASX listing. The same would go for a few others Aussie equities covering the coal and export sector (BHP, RIO, Whitehaven Coal, Macarthur Coal, Asciano, to name a few…). Expect a little more pressure over cotton and sugar exports in addition to coal. However, the important bottom-line impact may reduce further tightening requirements by the RBA over the short to mid-term and perhaps give a little respite to the AUD/USD interest rate differential, which in turn might mark-up the profits over some of the previously mentioned stocks, so…

The good news though: once down, there’s always upside, and the raft of rebuilding, capex roll-outs, and potential for new business should assist in this direction. After all, once you’re already in a dip, better buy than sell.

For those overseas to land of Oz, it is sometimes hard to realise the scope of our geography, so here’s a couple of superimposed maps to assist (both are to scale) with little google markers giving a rough idea of the spread of the floods. Roughly speaking, all of Germany has now been flooded or, if you prefer, there’s a nice stretch of water running all the way from NYC through to DC.



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