Shane McNeil, BNN Bloomberg
Canada’s energy sector could get a shot in the arm if the federal election results in a change in government, according to an economist with Macquarie Group.
David Doyle, Macquarie Group North American economist and Canadian market strategist, said investor sentiment in the country’s oil patch could see an uptick should Andrew Scheer’s Conservatives prevail in the election this fall.
“The current Liberal government is widely viewed as having not been the most favourable government for the energy sector,” Doyle told BNN Bloomberg in an interview on Wednesday. “I think if Canada shifted a little bit to the right and we had a Conservative government, it might lead to some strength coming through for the energy sector.”
Doyle added that the positives would not be limited strictly to domestic investment.
“I think foreign investors in particular would start to look at the space more closely if you did end up with a Conservative government in October.”
The S&P/TSX Energy Index has rallied more than 15 per cent so far in 2019, but uncertainty remains in the space due to regulatory hurdles complicating the approvals of major infrastructure projects like the Trans Mountain pipeline expansion project.
Doyle said that pessimism towards Canadian energy leaves room for the sector to run.
“We find people to be incredibly pessimistic about the outlook. Basically, the sector is being – for lack of a better term – left for dead,” he said.
“We think that’s an opportunity, because it tells you that there’s a lot of pessimism priced in and there’s strong ability for the sector and the macro backdrop in Canada to surprise people on the upside here.”
However, his optimism for the sector does not necessarily hinge on the Trudeau government being defeated in October.
“One of the things we’ve been highlighting in our research is just how reliant Canada’s economy and how reliant the Canadian federal budget is on the energy sector,” he said.
“I’m optimistic that even if you do end up with a Liberal government, you will end up with a more supportive backdrop for energy going forward.”
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