Amid ongoing geopolitical tensions and persistent inflation concerns, Australian investors are increasingly turning to defensive stocks dubbed ‘HALO’ stocks. Coined by Josh Brown, CEO of Ritholtz Wealth Management, ‘HALO’ refers to companies with ‘heavy assets and low obsolescence’. These are typically ‘old economy’ stocks perceived as having minimal exposure to the conflict in the Middle East or disruption from artificial intelligence.
Morgan Stanley analysts Rob Koh and Samantha Edie highlighted Cleanaway, Australia’s largest waste management company, as a top ‘HALO’ pick on the ASX. Cleanaway operates in the waste management sector, providing sustainable waste solutions to households, businesses, and communities. According to Morgan Stanley, Cleanaway’s risk-adjusted returns are attractive. The analysts also cited Auckland International Airport as another potential beneficiary of this trend, though they noted minimal earnings exposure to the Middle East.
UBS strategist Richard Schellbach has upgraded the industrial sector to overweight, suggesting investors buy industrial companies such as toll road operator Transurban, Qantas, and transport and logistics giant Brambles. However, UBS remains most bullish on mining stocks due to strong earnings momentum and a broader rotation away from tech stocks. Firetrail Investments portfolio manager Blake Henricks suggests Ramsay Health Care, which operates in the healthcare sector, is also a viable defensive option.
Yarra Capital’s head of Australian equities Dion Hershan views the ‘HALO’ concept as a symptom of market anxiety, noting that defensive stocks like Transurban, APA Group and Ramsay Healthcare remain attractive. He cautioned against overly pessimistic ‘doomsday portfolios’. Despite current uncertainties, some investors continue to see value in beaten-down tech stocks, adding select names like Xero, Block, and Car Group to their portfolios.
