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I’m going to break the rules of web-based editorial (and SEO rigging) to just give you the answer to the question in the headline: A change in Canada’s Prime Minister is unlikely to impact the ASX at all.
It’s still early days of course, and the chance isn’t zero. But my first statement the ASX is unlikely to see any impact is largely true.
Unless, of course, an anti-mining Prime Minister – or one overenthusiastic for regulation – is selected to replace Trudeau in Canada. That could be interesting, given how many of our miners are in Canada.
But seeing as the Conservative opposition is gaining traction in Canada ahead of an election later this year, that seems unlikely. It also seems unlikely Trudeau’s party would replace him with anyone radically different, especially ahead of an election.
Though, with some key polls erring in the opposition’s favour, maybe that’s a reality not too implausible.
What exactly is going on?
Long story short, Trudeau is having a situation similar to what Biden faced last year – he’s losing in (some) polls and members of his Liberal (read: ‘left’) government aren’t happy with him remaining the face of it.
Calling it a ‘leftist’ party fails to address the reality that all major left-wing parties on earth in developed economies today are centre-right when it comes to business and regulation, but hey, you get my point.
Conforming to a needle swing towards conservative ideation currently playing out in many parts of the Western world, Canadians are broadly increasingly looking at Trudeau’s main opposition rival.
And it has his colleagues worried.
So after receiving internal pressure, Trudeau has now announced he will resign. This comes after months of discussions of this ilk and also follows the departure of a key member of his government in recent history, over the issue of how Trudeau wanted to handle Trump’s claims of Canadian tariffs.
The world waits to see if they will manifest, but, the truth is Trump was just another headache for the Prime Minister added to an extant bundle. This isn’t too surprising, really: The man has been in charge for ten years. It’s easy to think a PM could do everything “right” and still find himself unfavourable after being around for that long.
Democracy, after all, requires leaders to change. That’s the whole point of elections. If not the whole point broadly.
So would Australian stocks take a hit?
By and large, were some kind of market-rattling replacement be selected (and don’t forget there’s an election soon anyway – this could speed that process up,) it would be the mining stocks that saw the impact.
And, at the risk of sounding painfully obvious, only those companies with operations in (or sales to) Canada would be impacted.
Right now, a healthy chunk of ASX juniors are in Canada. Many ran off to the country’s James Bay Region in the COVID-19 years, despite everything, to chase battery metals. Elsewhere, the country is well known for gold and base metals.
Canada is also home to global uranium giant Cameco and a lot of large resource giants.
(A fun fact: Australia and Canada have quite similar share markets at the structural level when it comes to the percentage of miners versus other sectors.)
So it would take a real shake-up to the status quo before Australian investors needed to worry about anything.
There is also the consideration that if a more right-leaning government replaces Trudeau’s later this year, any negativity that could stem from Trudeau’s replacement would probably be offset if the opposition comes to power. Worth noting: Trudeau’s liberal government is a minority government.
If you’re reading this article, we don’t need to discuss why right-wing politicians would probably stay away from red tape and green tape in the mining sector. If anything, it would likely be seen as good news.
Who could replace him?
We don’t really know. But there are some people more likely than others.
First in line (or at the forefront of top-off-the-head guesses) is the same key minister who quit the party only weeks ago: Chrystia Freeland, former Finance Minister and Deputy PM.
When she quit, the rest of Trudeau’s party delivered her a standing ovation. Make of that what you will. Some have already outright told the Canadian press they endorse Freeland (Canadian Kamala Harris, anyone?)
If Freeland is chosen, it’s unlikely there’d be any upset for Canada-exposed ASX stocks.
As Finance Minister, Freeland was an advocate for the country’s critical minerals program and spoke of the need for sovereign mining capacity in Canada. More drills, not less. Freeland even accused other countries (cough, China) of flooding Canada with critical minerals. Those aren’t the words of somebody inclined to make mining in the region harder, slower, or more expensive.
Next in line is Mark Carney, a former governor of the Bank of Canada (and Bank of England), who once received recommendations for leadership of the Canadian liberals back in 2012.
While his tenure looks less likely than Freeland’s, it’s unlikely the former bank governor will do anything to shake up the mining sector. Especially given its importance to Canada’s overall economy, which right now, isn’t exactly gangbusters.
There’s another character, Dominic LeBlanc, who has run for leadership before (albeit largely before Trudeau’s time) but still hangs around the sidelines. He had faced up against Trudeau but dropped out in 2013.
At least one former finance minister (not Freeland) has suggested the man could be the one who gets picked to manage the party into the election.
LeBlanc has also had dinner with Trump at one of the latter’s resorts – that should tell you everything when it comes to impacts on Canada-based ASX-listed miners.
Anti-business politicians don’t win
The above contenders hardly constitute an exhaustive list.
However, in the developed world where neoliberalism is firmly entrenched, it’s worth zooming out and realising that no party can afford to be anti-business. Where else would the donations come from?
This is a bit of a biased aside, but it’s relevant to my point.
That entrenched neoliberal reality is why this finance journalist finds particularly undercooked much of the international MAGA crowd’s lambasting of vaguely liberal parties as “communist.”
It’s a juvenile and demented version of the truth, which is actually that the Democrats (like every other ‘left wing’ party on earth, including our own ALP) are firmly business-aligned and centre-right. So too in Canada. Nobody is going to meaningfully challenge the corporate sector.
And that’s why the change in Canada’s leader is unlikely to rattle the ASX.
Or, you know, touch wood.
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