Buy BOQ for northern exposure

Chief Investment Officer and founder of Aitken Investment Management
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I remain a major bull on Queensland under the Newman government. I feel the combination of a business-friendly government and macro tailwinds will drive GDP growth outperformance from the Sunshine State.

South East Queensland effectively was ‘Australia’s Florida’ in the GFC. The residential property market was hit hard after years of speculative over-build, with residential prices experiencing a deep correction. To add insult to injury, the actions of the US Federal Reserve sent the Australian Dollar into a new orbit, all but destroying the inbound tourism market into Queensland, because it became bad global-relative value. A series of severe weather events that got global coverage didn’t help either.

The right exposure

All those headwinds have now turned to tailwinds, even bellwether Noosa beachfront apartment sales are up, and I want to keep the foot to the floor on listed Queensland exposures. The massive Gladstone LNG developments and their long-term contribution to state GDP are also underestimated. In very basic terms, this leads me to liking the Queensland stocks that got hit hardest in the GFC, namely the mortgage banks Suncorp (SUN) and Bank of Queensland (BOQ).

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