Pension leaders weigh new risks as Quebec’s political shifts and US tariffs reshape investment priorities
Quebec’s push for greater local investment by its pension fund is intensifying as political uncertainty and trade barriers reshape the province’s economic outlook.
Premier Francois Legault says the Caisse de Depot et Placement du Quebec (CDPQ) must “do even more” to invest in sectors such as manufacturing and critical minerals.
Bloomberg reports that this call goes beyond CDPQ’s current plan to allocate $100bn—about 20 percent of its net assets—within the province by next year.
Legault emphasized that CDPQ, which manages $496bn, should take “calculated risks” to support Quebec’s economic development, despite its legal mandate to act independently.
This call for increased local investment comes as US tariffs on key Quebec exports, including aluminum, have heightened the need for economic resilience.
The province’s manufacturing and resource sectors are feeling the pinch from these levies, while Quebec’s deficit outlook remains more strained than Ontario’s, as noted by Dominique Lapointe, macro strategist at Manulife Financial Corp.
S&P Global recently downgraded Quebec’s credit rating to A+, citing slowing population growth and a softer tax revenue outlook.
Meanwhile, political risk is weighing on investor sentiment.
As per Bloomberg, the separatist Parti Québécois (PQ) is gaining momentum ahead of the provincial election, with leader Paul St-Pierre Plamondon promising a referendum on independence if elected.
This has contributed to a widening spread between Quebec and Ontario’s long-term bonds, reaching levels not seen in nearly a decade.
Portfolio managers such as Ryan Goulding of Leith Wheeler Investment Counsel Ltd. have cited the “overhang of a referendum” as a reason to reduce exposure to Quebec bonds.
Despite these challenges, CDPQ’s spokesperson maintains that the fund’s local expertise allows it to deploy capital effectively, but stresses the importance of responsible investment to protect and grow Quebecers’ retirement savings.
According to a recent Leger Marketing survey, about 60 percent of Quebecers would vote against leaving Canada, while 30 percent would support secession, with the remainder undecided.
