Election to be held on April 28
After months of political and economic turmoil, Canada’s upcoming federal election will finally provide advisors and investors with a clear economic vision for the future.
A federal election has been called, with voters going to the ballot box on April 28. Polls are expecting a tight race between Conservative leader Pierre Poilievre and newly chosen Liberal candidate Mark Carney, a seismic shift from what was predicted to be a comfortable win for Poilievre’s Conservatives before former Prime Minister Justin Trudeau’s resignation in January.
The ever-changing situation surrounding the country’s next leader has caused a high degree of uncertainty in Canadian markets, according to Hilbert Wan. He says regardless of the outcome, having a permanent leader with solid economic goals will give investors firm market clarity that has not been seen in months.
“The biggest challenge in the last few months in the money market space or in the fixed income space is that there’s a lot of uncertainty,” he said. “We try to prevent acting on news, but also take a step back and look at the data and see what it is telling us.”
With parliament prorogued since former Trudeau’s departure in January, Wan emphasizes the Canadian government’s inability to comprehensively address US President Donald Trump’s tariffs, an issue he says has furthered market uncertainty in recent months.
“Before Carney get elected, we didn’t even have someone to go to talk to Trump,” said Wan, portfolio manager at Purpose Investments. “The best we had was Doug Ford or another provincial premier representing us and negotiating with them.”
As the campaign trail moves forward, Wan says campaigns will react to market shifts, giving investors and advisors a clearer view on candidates’ platforms. Keeping track of market trends during the election cycle will be useful to understanding Canada’s economic future, according to Wan.
“Pay attention to every single piece of economic data, that will also impact what the candidates say,” he said. “At the end of the day, the candidates want to grow the economy again, they want to invest in the country. There are a lot of moving parts.”
The Bank of Canada has been left in undesirable position, as it is grappling with stubborn inflation along with the long-term implications of Trump’s tariffs. Wan argues that once a new prime minister is elected, the BoC will benefit from the clarity of a platform to spur domestic economic growth amid a heightening trade conflict.
“One thing that is clear to us is the BoC wants some clarity around what the fiscal policy is going to be going forward, because that will impact what they are doing as well,” he said. “If they are stimulating the economy, then it means that the GDP will go up, then maybe the inflation will go up as well. We want to see what policy is going to be implemented, and what the downstream impact will be.”
Diversifying Canada’s economy, particularly shifting away from Canada’s housing-centred GDP growth strategy, should be a priority for the next prime minister, according to Wan. He also argues that immigration and unemployment will be addressed by whoever wins the spring election.
The consumer carbon tax has already been scrapped in Carney’s short time in office, something Poilievre has promised throughout his time as Conservative leader. Wan believes more tax cuts could be on the way regardless of who wins the next election.
“I will assume that given the GDP, we probably will see some tax savings and some stimulus,” he said.
Defence spending has been significantly increased in Europe in response to a rapidly changing geopolitical climate, with Germany’s re-armament seen as a particularly strong opportunity for investors. Wan wonders if the next Canadian prime minister will similarly expand military spending, and what opportunities will arise for advisors and investors to capitalize on any defence spending boosts.
