The Alberta provincial election took place on April 16, and as expected, the United Conservative Party (UCP) surged to a comfortable majority win.
The UCP captured 54.8% of the vote and won 38 additional seats to establish a dominant 63-seat majority. This ends a short stint for the NDP, which managed to break decades of Conservative rule with its shocking 2015 election win.
The energy sector appeared to rejoice at the win. Jason Kenney and the UCP have vowed to pursue policies more favourable to the sector. The UCP is seeking a reduction in corporate taxes, they vow to scrap the carbon tax, and the party wants to cut regulations.
The iShares S&P/TSX Capped Energy ETF (TSX:XEG) responded well to the election. The ETF is up 2% over the past week as of mid-afternoon trading on April 24. Shares have climbed 21% in 2019 so far.
Some of the top holdings in the ETF include Alberta-based companies like Suncor Energy (TSX:SU), Encana (TSX:ECA), and Imperial Oil (TSX:IMO). Suncor and Imperial Oil were vocal in opposition to the NDP government's production cuts that were implemented to combat price differentials in late 2018.
The rally for oil prices in 2019 has helped boost the Canadian energy sector. Economic headwinds remain a concern, and this ETF should be regarded as pricey in late April.
Investors should expect volatility in the second half of 2019 even on the back of what is perceived as a favourable election result for the Canadian energy sector.
