Politics Insider: Hodgson makes major projects prediction

Canada’s Energy and Natural Resources Minister said up to 5 to 10 new major resource projects could reach final investment decision or break ground by spring 2027, as the government pushes faster approvals through the Major Projects Office. The article also notes Ottawa ran a $25.5-billion deficit in the first 11 months of the fiscal year, with the full-year shortfall projected at $78.3-billion in the November budget. The broader policy backdrop is the Liberal government’s effort to offset U.S. trade-war pressure by accelerating resource investment and infrastructure development.

Analysis

The market-relevant signal is not the headline project count; it is the state’s willingness to compress permitting into a quasi-industrial policy tool. That tends to re-rate incumbents with scarce permitted assets because optionality on future projects becomes more valuable when the bottleneck shifts from geology/capex to process and capital allocation. In Canada, that most directly benefits pipeline, gas midstream, electric transmission, uranium, and select miners with shovel-ready inventories, while it quietly hurts late-cycle brownfield competitors that need a cleaner regulatory path to justify growth.

For ENB, the second-order effect is that any faster approvals for upstream gas and power assets improve the throughput case for expansion capex and reduce the duration risk embedded in large capital projects. The biggest upside is not immediate tariff offset or GDP uplift; it is lower probability of stranded capital and better visibility on rate-base or contracted cash flows over 12-36 months. The market may still underappreciate how a federal fast-track regime can improve valuation multiples for assets that are otherwise priced like perpetual regulatory hostage situations.

The fiscal backdrop matters because an improving deficit path gives Ottawa more room to lean into industrial policy without an immediate bond-market penalty. That is supportive for infrastructure and defense-linked spending themes, but it also raises the probability of targeted subsidies rather than broad demand stimulus, which is better for capital goods suppliers than for cyclical consumer exposure. The risk is execution slippage: if only 5-10 projects actually reach FID by spring 2027, the current optimism will fade into a standard Canadian-policy discount, especially if provincial opposition or First Nations litigation slows the pipeline.

Consensus is likely underestimating duration: this is a multi-year pipeline, not a one-quarter catalyst. The best trade is to own names with already-sanctioned growth and incremental option value on further approvals, rather than pure announcement beta. If trade-war pressure intensifies, the government will likely favor projects that improve export capacity and domestic energy security first, which should widen the spread between “policy winners” and everything else.

Key Decisions for Investors

• Long ENB on a 6-12 month horizon; add on pullbacks if the market treats the project pipeline as headline noise. Risk/reward favors a 10-15% re-rating if approval velocity improves, with downside capped by the existing cash-flow base.
• Pair long ENB / short a Canadian utility or infrastructure name with limited project backlog over the next 12 months. The thesis is valuation dispersion: sanctioned-growth optionality should outperform regulated-no-growth duration assets if the fast-track regime gains traction.
• Initiate a basket long in Canadian energy infrastructure and materials with permitted inventories; use a 3-6 month window to position ahead of potential FID announcements. Best risk/reward is in names where incremental projects can move consensus EBITDA by 5%+ without major balance-sheet strain.
• For event-risk hedging, buy longer-dated call spreads in ENB rather than outright stock if you want asymmetric exposure to approval headlines. This limits downside if Ottawa overpromises and the project slate stalls into 2026-2027.
• Avoid chasing pure small-cap ‘permit story’ names until there is evidence of actual FID conversion. The likely loser is illiquid, pre-cash-flow developers that will be used as policy theater but not necessarily funded first.