Company Interview / Why John's favouring a pivot back to growth

Key points

Lockton sees March’s 10% equity drawdown as embedding excessive pessimism and favours a pivot back to growth and REITs such as Charter Hall (ASX:CHC) ASX (ASX:ASX) is viewed as structurally challenged by regulatory costs and governance uncertainty despite its monopoly position In gold, Lockton prefers Newmont and Capricorn Metals (ASX:CMM) over Northern Star Resources (ASX:NST) due to operational concerns Westpac (ASX:WBC) and Macquarie Group (ASX:MQG) are highlighted as standouts ahead of May results, with improving credit and earnings dynamics A.P. Eagers (ASX:APE) and Challenger (ASX:CGF) are seen as beneficiaries of EV momentum and regulator-driven capital returns respectively

John Lockton from Sandstone Insights views recent market volatility as an opportunity for selective repositioning across Australian equities. Lockton notes Australian shares fall as much as 10% through March, which in his view builds in significant pessimism, particularly around war-driven energy and inflation risks. He suggests a “believable off-ramp” for the conflict could see oil prices ease, risk appetite return to equities and bond yields moderate, aided by global fiscal support for energy costs.

In portfolio terms, Lockton favours rotating from pure defensives and oil-linked names into growth and yield plays that have sold off, including REITs such as Charter Hall (ASX:CHC). He sees ASX (ASX:ASX) as facing sustained pressure on free cash flow due to rising regulatory costs, board uncertainty and the need to reinvest merely to maintain its licence. In gold, he prefers Newmont, Capricorn Metals (ASX:CMM) and others over Northern Star Resources (ASX:NST), where he highlights repeated downgrades and operational issues.

Among financials, Lockton views government-backed SME credit support as a “free kick” for the major banks, reducing prospective bad debts, with Westpac (ASX:WBC) his preferred pick into May results. He expects Macquarie Group (ASX:MQG) to benefit from energy market dislocation, anticipating both EPS and DPS beats.,Lockton is positive on A.P. Eagers (ASX:APE), citing ongoing bolt-on dealership acquisitions and strong leverage to electric vehicles through its BYD relationship. He also sees Challenger (ASX:CGF) as a developing capital-return story, with new APRA capital rules potentially enabling material buybacks, special dividends or selective M&A over the next two years.