Canadian Markets and the Liberal Minority: Insights from Thomas S. Caldwell

Author : Caldwell Investments | Published On : 19 Nov 2025

Following Canada’s federal election on October 21, 2019, the Liberal Party secured a minority government, while the Conservative Party assumed official opposition status. Both the Bloc Québécois and the New Democratic Party gained enough seats to potentially influence legislation and support the Liberal agenda on a case-by-case basis. As markets and investors digest the implications, industry experts offer insight into what this new political landscape might mean for institutional investors and the broader Canadian economy.

Brett House, deputy chief economist at Scotiabank, suggests the macroeconomic impact will be modest. “Deficits at the federal level aren’t expected to exceed one per cent of GDP. While the Liberal platform included some additional spending, debt-to-GDP ratios are projected to continue declining over time,” he explains. House also notes that markets will likely tolerate the small increase in deficits without concerns over debt sustainability, and any near-term boost will primarily affect consumer spending rather than broader economic aggregates.

Anish Chopra, managing director and portfolio manager at Portfolio Management Corp., shares a similar perspective. He believes that policies implemented under the previous Liberal majority government will largely continue, providing continuity for businesses and investors alike.

However, Thomas S. Caldwell, chairman and founder of Caldwell Investment Management Ltd., offers a more cautionary view. “I worry about the debt we’re creating for future generations,” Caldwell remarks. His concerns extend to the business environment, particularly the Canadian equity market. “Increasingly, the Canadian equity market is getting hollowed out with fewer and fewer companies—no real new entrants in the high-tech sector. Much of that innovation is now taking place in private equity.”

Caldwell’s observations highlight a growing challenge for Canadian institutional investors: the scarcity of publicly traded companies in emerging industries. This trend, combined with heightened regulatory oversight and political uncertainty, can constrain investment opportunities and affect market dynamics over the long term.

In terms of governance, a Liberal minority government offers several possible scenarios. It may seek a formal coalition with another party or operate on a case-by-case basis, gaining support for specific pieces of legislation as needed. According to House, the latter approach appears more likely. “Where measures relate to the resource and energy sectors, they may look to Conservative support. Social initiatives like pharmacare may require backing from other opposition parties,” he explains.

Early market reactions to the election results have been subdued. The Canadian dollar experienced minimal movement, reflecting a tentative assessment by investors that significant policy shifts are unlikely. Most observers anticipate that the minority government will maintain a relatively stable status quo, with incremental adjustments rather than sweeping reforms.

About Caldwell Investment Management Ltd.

Caldwell Investment Management Toronto is a respected portfolio and investment fund manager serving both individual and institutional investors. With a focus on disciplined portfolio construction, active management, and long-term value creation, the firm offers a variety of mutual fund and pooled fund products. Caldwell’s approach emphasizes research-driven decision-making, strategic diversification, and prudent risk management to help investors navigate an evolving market landscape. Under the leadership of Thomas S. Caldwell, the firm has established a reputation for thoughtful investment strategies and a commitment to protecting and growing client assets.

As Canada moves forward under a Liberal minority government, insights from experienced industry leaders like Caldwell underscore the importance of vigilance, flexibility, and strategic planning for investors seeking to manage risk and identify opportunities in a changing political and economic environment.

Check out their LinkedIn profile for in-depth details.

(Disclaimer: We are not associated with Caldwell Investment Management.)