Inside the Macquarie Conference: retailer woes, airline surprises and Australia’s potential AI boom

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The Macquarie Conference has become one of the must-attend events in every Australian fund manager’s diary. In this podcast IML portfolio managers Daniel Moore and Lucas Goode talk to Natixis Investment Managers’ Daniel Shelest about what they heard and learned at this year’s conference including:

• Which types of companies are suffering most due to the impact of the Iran War and higher interest rates
• How Australian companies are thinking about AI right now
• The most surprising and interesting sessions at the Conference
• The wave of AI capital expenditure that might be flowing to Australia
• How companies and the Australian economy are travelling

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Lightly edited transcript – Recorded on 7 May 2026

Daniel Shelest: Hello and welcome to Navigating the Noise, a podcast by Natixis Investment Managers, where we bring you insights from our global collective of experts to help you make better investment decisions. I’m Daniel Shelest and today I’m joined by Daniel Moore and Lucas Goode, portfolio managers in IML’s investment team, to discuss what they’ve learned at the Macquarie Conference, which has been running over the past few days here in Sydney.

Daniel and Lucas, welcome back, gents.

Daniel Moore and Lucas: Thanks, Dan.

Daniel S: All right, so let’s get into it. You know, I’m super curious. For those of us who have never been to the Macquarie Conference, what’s all the hype about? What’s it actually like to be there in the flesh in person and why has it become such a highly anticipated and well-attended event?

Lucas: Look, there’s always a bit of a buzz around. You’ve got a critical mass of companies, over 100 companies presenting more or less simultaneously. You’ve also got most of the major institutional investors in the Aussie market.

But the number one reason it’s so popular and important, actually, Dan, is just timing. So most companies have a June year end, which means they report full year results in August. You naturally get an update in October or November at AGM Season, and then you have the February half year results, but the Macquarie conference falling in May means it kind of occurs midway between the first half and full-year results. So you often get the first look, or really the last look you get, at how companies are performing before full-year results often. It’s why they call it confession season. And that’s the main reason why you get so much investor interest and media attention on the conference.

Daniel M: And I think it’s fair to say this year, given the timing of the Iran conflict, the attendance was probably the most I’ve seen.

Lucas: Funny, wasn’t it? We were saying that like, you almost have preferred it to be about two or three weeks later, just to get another few weeks Iran-affected trading.

Daniel M: Yeah, no, for sure. And then the other benefit for the fund managers like us that get to go, if you’re lucky, you get a lot of one-on-one meetings as well in private rooms. So we had a lot of those meetings.

Lucas: And just by virtue of so many executives and investors being in the same place as well, you even get the fortuitous bumping into a CEO next to the coffee cart.

Daniel S: So you guys mentioned the impact of the Iran war. Do you think that you’ve got a clearer picture of this after three days at the conference?

Daniel M: To be honest, Dan, as Lucas said, it would have been great if the conference was a few weeks later. But look, we got some insights for sure. I think it’s fair to say companies in general are managing it better than expected. And that’s in regards to demand hasn’t fallen off a cliff. And in regards to supply shortages, that’s been managed better than expected as well.

And in general, companies feel like they’ve got a pretty good feel for their supply outlook for probably the next month or two. Beyond that, it’s a bit trickier. And that really just depends on how long this conflict lasts. In regards to company performance, there were some negatives. I guess maybe the sorts of companies that are doing better than others are, the B2B businesses Lucas?

Lucas: Yeah, I’d agree with that. I mean, I guess it’s important to differentiate between the impact of higher interest rates to just to take the rate side for a second on consumers versus businesses. I mean, if you’ve got a big mortgage, a couple of rate hikes has a meaningful impact on your discretionary income and therefore how much you can spend. And we saw that in the JB HiFi and Super Retail downgrades.

Whereas for businesses, it’s pretty immaterial. And so you’re not going to see an immediate impact on investment decisions. And I think also it’s easier and faster to be able to pass on price hikes as well. I mean, it was interesting talking to SGH when they mentioned Boral, that they’re putting in weekly changes to their fuel price surcharges. And you know, this isn’t a situation where their customer can just decide, well, we’re not going to accept that because obviously, you know do they want the concrete or not? So they don’t really have a choice but to take it, whereas that’s not necessarily the case with consumers, I think we were talking about Coles and Woolies before, Dan.

Daniel M: Yeah, and Wesfarmers as well, they were saying they’re probably not going to pass on the higher costs in full. They’re very cautious given the weak consumer, not to put prices up too much and lose share. So I think margins are probably going to come under a bit of pressure for the more consumer businesses, even the supermarkets. We saw their share prices come off a bit. Probably the same even for Bunnings, Wesfarmers share prices off a little bit.

But then it’s odd, Breville actually gave a relatively upbeat update and they really were talking about the K-shaped economy* going around the world. And so for those that you don’t know, we don’t actually own Breville, but Breville sells a lot of high-end small appliances, particularly coffee machines. And they said, because they sell a high-end product and wealthy consumers around the world are doing pretty well in general, they have not really seen demand slow much at all.

So it’s very nuanced. If you’re more mass market, you’re feeling the pinch a bit more. There’s certain categories that are weak. Alcohol: Endeavour gave a really weak update for March and April. Whereas healthcare spending, we saw Sigma, which owns Chemist Warehouse, said sales actually accelerated because they’re also a discounter. So they’ve won some share. So very nuanced.

Lucas: Yeah, it’s always kind of bottom-up stock picking a bit, isn’t it? I mean, even think about those categories. I guess alcohol is always at risk in a downturn because trading down is so easy. You know, I can quite easily go from a $50 bottle of wine to a $25 bottle of wine. You can’t necessarily do the same in terms of spending at Chemist Warehouse.

Daniel M: Yeah, absolutely.

Daniel S: That’s interesting. And, you know, generally speaking, what was the most surprising or perhaps interesting session at the conference?

Lucas: So, I’m going to highlight two there, Dan. and they’re both related to construction. In that, so SGH, which is a holding of ours, the old 7 Group Holdings, owns Boral and Coates on the construction side.

Ryan Stokes, the CEO, was asked in the Q&A, well, you know, surely you’re concerned about weakness in construction impacting Boral and Coates. He almost looked mystified at the question. He said: “Well, no, actually, the demand outlook’s really strong. I’d say it’s above mid-cycle.” Now, clearly, as Dan said, possibly in a month or two, it might be a different story. But you know, what he was referring to is, well, infrastructure spending doesn’t stop because rates went up a little bit and there was temporarily higher diesel costs (we hope temporarily higher diesel costs) and even residential construction. And the core issue is that Australia doesn’t build enough housing.

The government is still going to try and get that moving, whether they’re successful or not is another case, but it’s not necessarily interest costs or fuel costs that have been holding back residential construction. So, you know, I found that really interesting because I think one of the reasons the share price had been under pressure was expectations that they would have to downgrade into FY27, which I just don’t think is going to happen.

And Qualitas was another interesting session. Private credit player, mostly lending to residential construction in Australia, that said quite adamantly on stage, well, we actually think that this is good for us. We do think the RBA is going to raise rates at least two or three more times and that that’ll increase demand for our products, which is effectively lending to property development. So those were probably the two most surprising to me. And I think just touches on what Dan said earlier, that if you’re selling into businesses it’s less of an impact, there’s less of an impact from the higher rates than selling to consumers who, you know, the rate hikes, the transmission mechanism really is through mortgage holders.

I don’t know if there’s any sessions you wanted to highlight, Dan.

Daniel M: I mean, the Chemist Warehouse sales accelerating was interesting, but I’d probably pick one that surprised me more – Qantas. Qantas, you would have thought, would be really struggling at the moment. But what was interesting, which I didn’t appreciate, was that international capacity coming out of Australia internationally is down 20%. And because of that, the demand for Qantas international flights has gone up a lot, particularly to Europe.

And that’s because all the Middle Eastern carriers are pretty much out of the market completely. And even the Asian carriers have pulled out of Australia. And the reason for that is they’re redirecting planes to go from Asia to Europe, because the Middle Eastern carriers aren’t going to Asia either. So, yeah, I was thinking Qantas was going to be in a bit of pain; they’re actually doing better than expected. And then the other sort of fear was jet fuel being in the real shortage. But again, because demand’s down so much, because international capacity is down so much, it’s the…

Lucas: There’s jet fuel available. Those flights aren’t flying anymore.

Daniel M: So look, I don’t want to paint a picture, everything’s rosy, but it’s just much better than feared.

Lucas: Probably fits in with the K-shaped economy you were talking about before, Dan, and you know, realistically, it’s the more affluent consumers who are more likely to be buying international flights in the first place.

Daniel S: There you go, polarising. All right, I’m going to ask you, it’d be remiss if I didn’t chat about AI. Outside of the Iran war, AI is really the most talked-about thematic affecting markets. How dominant was this theme at the conference and what did you guys learn?

Daniel M: Look, it was mixed, wasn’t it? Some companies were talking it up in terms of cost-out opportunity, and then other companies were… Talking it down a little bit in regards to saying… They’re only deploying it where it really makes sense and there’s a business case. I think I heard the phrase: “It’s got to make the boat go faster.” multiple times.

So yeah, mixed, I would say at a general level.

Lucas: As it pertains to AI disruption, it’s almost. It’s almost less sometimes around what the actual plans the companies have and more just being confident they do have a plan. I mean, everyone wants to hear that a company they’re invested in is more likely to be predator than prey. And obviously they’re all going to say that. But some companies really sound like they’re floundering around, and others really give you the sense that they’ve been thinking about this deeply, long before we ever started playing around with Claude.

Daniel S: Another one on AI, just got me thinking because AI CapEx is really driving a huge chunk of US GDP growth right now. From what you heard at Macquarie, is Australia getting any of that boost too, would you say?

Lucas: Yeah, it’s a great question, Dan, and the answer is that not quite yet, but it’s coming. To give you a couple of anecdotes, so two of our holdings, SGH and HMC, both have exposure to, or second-order exposure to data centres. HMC through their Digico REIT, which has operations in the United States and Australia, winding down the US operations for a reason I’ll get to in a second. And then SGH is their West Track division, is the distributor for Caterpillar in Western Australia and New South Wales.

Now, Caterpillar in Australia is really a mining business. But globally, it actually does more in power than mining. And that’s due to data centres. So a lot of these data centres in the US now have dozens or even hundreds of generators that are operating the data centre, either because it’s being powered by intermittent renewable energy or it’s completely powered by gas. And it’s interesting that in the United States, there’s been so many plans for data centres and it’s pushing up power prices that the big tech and the data centre operators have actually started to lose their social license to operate.

So 14 states, including California, have now banned any new data centre developments being connected to the grid. That’s why HMC’s Digico is exiting the United States because they had two LA projects which have now been kiboshed. And they are now recycling capital back into their Australian operations. And the thinking here is that as a ‘five eyes’** economy that has abundant space, relatively abundant and not too unaffordable power at the moment, Australia makes an obvious kind of next cab off the rank in terms of AI CapEx.

Now, I will caveat that in saying that, you know, we’ve also got issues with, you know, transmission and distribution and the grid and energy prices. So I don’t think it will necessarily be that long before you’re also bumping up against social licence to operate in Australia. But certainly I do think there’s a big CapEx wave coming. And that’s an area where a lot of investors have been trying to get exposure to the picks and shovels.

So, you know, in our funds we own the likes of GenusPlus, SGH and HMC, as I touched upon, but certainly there is going to be an AI CapEx boom in Australia as well, or at least that is very much the feeling coming out of the conference.

Daniel S: There you go. All righty, well, look, just to wrap this up, one final question. Based on what you’ve heard at the conference, what do you think of the general health of the economy and how companies are going and generally how are they feeling about the future?

Daniel M: I hate to use the same word, but mixed. The outlook for margins is probably a bit under pressure because inflation is coming down the pipe and the ability for them to pass it all on to consumers is pretty tough.

So I think the margin outlook for consumer companies is tricky. Whereas there’s a number of…more B2B businesses that are doing pretty well, but their share prices have been really hit. I’m probably a little bit less optimistic on the economy, but I’m pretty optimistic in regards to definitely some investment opportunities out there.

Daniel S: All righty, well, thank you guys. Let’s wrap it up. So thank you, Daniel, Lucas, and of course, our listeners for joining us today. If you enjoyed the episode, please click follow on your favourite podcast platform and tune in again to hear more from our global collective of experts.

* The K-shaped economy refers to growing inequality in the country. Richer people are generally doing well and getting richer and poorer people are generally becoming poorer and struggling more.
** Five eyes refers to the intelligence-sharing alliance between Australia, Canada, New Zealand, the United Kingdom, and the United States.

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