Fund managers in Canada are pushing their chips into sectors expected to benefit from

Prime Minister Mark Carney ’s plan to fast-track major infrastructure projects and become less reliant on trade with the U.S.

The country is already feeling the pain from U.S. tariffs on its steel and auto sectors, while Canadians are incensed by

Donald Trump ’s repeated threats on their sovereignty. But on Bay Street — Canada’s main financial corridor — investors are buying into one of Carney’s own slogans: “We can give ourselves far more than the Americans can ever take away.”

The “nation-building” effort isn’t just about patriotism, it’s also about profit. When the government in September announced five projects for which it would expedite approvals, Toronto-listed engineering and construction firms stocks jumped.

Institutional investors took note of plans to expand a port, a mine, and a

natural gas facility — ventures led by private money. More projects are slated to be announced in November.

“This is big, really big,” said Brian Madden, chief investment officer at First Avenue Investment Counsel Inc. “It’s a sea change from what was possible under the predecessor government.”

Carney, a former central banker, succeeded Justin Trudeau as prime minister in March and won a federal election in April.

Madden said the infrastructure push is the biggest positive catalyst for the

“Canada’s been under-invested globally for years,” said Greg Taylor, chief investment officer at PenderFund Capital Management Ltd. “If we actually start to see some concrete examples of growth, that could bring a lot of investor money back to the country.”

Canadian portfolio managers are trying to pick out winners as more projects are unveiled. They’re focused on construction, capital, and the untapped potential of the domestic energy sector.

Picks and shovels

Since Carney’s election, provincial and territorial leaders across the country have pitched a number of projects that they’d like to see expedited.

Whether it’s a high-speed rail line linking Toronto to Quebec City, or roads through the Arctic, heavy machinery is needed to get them done.

Equipment suppliers Finning International Inc. and Toromont Industries Ltd. “are the two Caterpillar dealers in Canada, and they should benefit from any projects that involve earthmoving,” TD Cowen analysts led by Aaron Bilkoski wrote in a note.

Wajax Corp., Canada’s exclusive dealer for Hitachi heavy equipment, is another potential winner, they said.

“When you build that kind of infrastructure, it’s the picks and shovels that get a lift first,” said Laura Lau, chief investment officer at Brompton Corp., which manages over C$3 billion ($2.1 billion). She said construction firms are also likely to gain further.

Drill, baby, drill

Canada’s long-neglected oil and gas stocks are poised for the “biggest valuation lift” from the infrastructure push, PenderFund’s Taylor said.

“That’s the sector that has lagged the most, so there’s probably the most opportunity there,” he added.

Over the last five years, gains in the S&P/TSX Energy Index have significantly lagged those of its S&P 500 equivalent, partly because Canadian oil trades at a discount to U.S. crude. Fund managers say they have been buying low on Toronto-listed energy stocks, which may get a boost from a new oil export pipeline and proposals for liquefied natural gas projects.

“We smell the winds of change,” said First Avenue’s Madden. He said his firm piled into Toronto-listed natural gas stocks both before and after Ottawa put the expansion of an LNG export facility, led by

Shell Plc, on the fast-track list. Ksi Lisims LNG, a project whose backers include Tourmaline Oil Corp. , also received government approval last month. “If we do start to fast-track pipelines and get projects going, that will just help the producers get better pricing globally and that’ll be the sector that would have the most multiplying benefit,” Taylor said.

TD Cowen also expects a federal green light for Pathways Alliance, a carbon capture project spearheaded by some of Canada’s largest oil sands producers.

Big projects, big loans

Someone has to fund all these ventures, which is why financials — the largest sector by weight on the TSX — should get a boost as well, fund managers say.

The sector tends “to benefit through these big periods of lending,” said Sarah Neilson, co-head of North American equities at RBC Global Asset Management, which has $534 billion in assets under management.

“The banks are well positioned to help participate in that,” she said.

Ottawa forecasts that the first five projects will generate US$60 billion for the

Canadian economy , making them big enough to help “bolster and insulate” the country “amid an ongoing trade war with the United States,” Jefferies analyst John Aiken wrote in a September note.

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Given the magnitude of the projects being considered, the capital needed to complete them will also require investments from the country’s pension funds and asset managers, First Avenue’s Madden said.