After a campaign that lasted 37 days, the Liberal Party, led by Mark Carney, secured a mandate to form the next government. Despite falling short of a majority, Carney's Liberals staged a comeback in a federal election punctuated by record-breaking early voter turnout, U.S. President Donald Trump’s tariff threats and his repeated attacks on the country’s sovereignty with calls to make Canada the 51st state.
John Bai, Chief Investment Officer and Adelaide Chiu, Vice President and Head of Responsible Investing at NEI Investments have shared some insights on what this new government means to investors.
What can we now expect from Prime Minister Mark Carney?
Mr. Carney ran on an election platform that is stimulative, focusing on long-term productivity investments. His main priorities include building AI infrastructure, increased R&D investment for AI, cleantech and critical minerals and expanded STEM education. His vision for the Canadian energy superpower includes oil and gas, and renewable energy, while carbon taxes will be targeted at industrials. Mr. Carney’s trade strategy is to diversify trade away from the U.S. (which is the destination for 75% of our exports) to “like-minded” countries within Europe and Asia. He wants to solve the housing crisis by building 500,000 new homes per year, with a focus on prefabricated and multi-unit residential housing with incentives for environmental retrofits and tax relief for first-time buyers.
His aggressive federal funding should boost economic growth to offset the negative effects of tariff uncertainty. However, this would reduce the Bank of Canada’s ability to lower rates, and thus crowd out private spending. In the long-term, we are cautiously optimistic that these will help improve productivity for Canadian companies, leading to better earnings growth, stock market returns and wages, and prosperity opportunities for all Canadians.
Mr. Carney is more likely to leave some existing regulations in place, and we expect he will continue to focus on addressing climate risks and costs without constraining economic growth. This will be important for Canada to meet its goals towards a lower carbon economy. His actions will have positive implications for pipelines and energy companies, although fewer than under a Conservative government, and we welcome the development of an east-to-west electricity grid.
We expect the construction industry, real estate, and banking sectors to benefit from housing policies. A streamlined permitting process for renewable energy projects, infrastructure projects and mining could be beneficial, provided there is an explicit recognition of Indigenous rights (including free prior and informed consent) and their inclusion in the economic benefits of any natural resource development in their communities.
Overall, we expect responsible investors to benefit from the policies that Mr. Carney’s government will support due to reduced uncertainty around environmental sustainability outcomes, and more green incentives to support opportunities. NEI will continue to take actions on behalf of our investors, including:
- Engaging with pipelines and energy companies on their carbon emission reduction strategies. We have actively engaged with the oil and gas industry to look for ways to accurately measure and abate methane emissions.
- Encouraging regulators to mandate climate-related information that is material to investment decisions.
- Leaning into work focused on responsible mining which will be critical to ensuring project approvals can be enacted on with the urgency needed to support the low carbon transition.
- Engaging companies on the topic of fair wages and, for the banks, fair lending practices, to address the growing income inequality trend.
- Engaging with companies and at a systemic policy level on social issues such as affordable housing, digital rights, and quality of life.
- Participating on boards such as the Canadian Sustainability Standards Board and Initiative for Responsible Mining Assurance to support sustainability efforts and the inclusion of Indigenous Peoples in associated economic and social benefits.
Stay informed. Stay invested.
In his victory speech, Mr. Carney emphasized Canada's resilience against external pressures, particularly from U.S. President Donald Trump. “Trump is trying to break us so that America can own us. That will never, that will never ever happen.” He followed this with a call for Canadians to acknowledge the shifting global dynamics, saying, “We also must recognize the reality that our world has fundamentally changed.”
This reflects his focus on uniting Canada to face new challenges and redefining its position in a changing international landscape. Our advice continues to be - Stay informed, stay invested.
Speak to your financial advisor today to ensure your strategy aligns with the evolving landscape.
