Kasia Broussalian, Nick Megaw and Ilya Gridneff
This is an audio transcript of the FT News Briefing podcast episode: ‘Canadian politics post-Trudeau’
Kasia Broussalian
Good morning from the Financial Times. Today is Wednesday, January 8th, and this is your FT News Briefing.
Chinese airlines are taking off in Europe and Canada’s Liberal party is fighting for political survival. Plus, is the IPO market, dare I say it, finally back? I’m Kasia Broussalian and here’s the news you need to start your day.
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European demand for Chinese airlines is soaring. Beijing’s three biggest carriers are rapidly expanding routes between China and western Europe. Passenger capacity was up almost 20 per cent in October when compared with the same month five years ago. And it’s got a lot to do with Russia banning most European airlines from its airspace back in 2022. This added hours to flights to Asia for western carriers. Fuel costs shot up and that forced companies like British Airways and Virgin Atlantic to suspend some routes altogether. This all means that Chinese competitors are now offering cheaper tickets and flying away with their customers.
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Canada’s ruling Liberal party is on the hunt for a new leader. Prime Minister Justin Trudeau announced his resignation on Monday after nearly a decade in power. He came into office in 2015 amid a wave of support. But years of political infighting, scandals and a cost of living crisis eventually took him down. I’m joined now by Ilya Gridneff to discuss what happens next. Hey, Ilya.
Ilya Gridneff
Hi. How are you doing?
Kasia Broussalian
Doing well, thanks. So walk me through the end of the Trudeau era. How did he end up being so unpopular?
Ilya Gridneff
Well, that’s a good question. I guess it’s the sort of infamous death by a thousand cuts. And if you really want to pinpoint where the trajectory started heading downward, it’s the Covid pandemic, the economic fallout, the massive inflation that came with that, and that was seen across the world. And Trudeau himself wasn’t immune to the effects of that.
Kasia Broussalian
So what was really the nail in the coffin for Trudeau?
Ilya Gridneff
The most recent blow to Trudeau came in mid-December. The finance minister, Chrystia Freeland, one of his loyalists and probably best ministers in the cabinet, resigned quite shockingly, came quite abruptly and released quite a stinging resignation letter pinpointing various issues she had with the prime minister’s direction.
Kasia Broussalian
And now that’s all led to a new leader that will be chosen in the next couple of weeks or months. So can you tell me who’s in line for that?
Ilya Gridneff
Well, Freeland herself is in line. She hasn’t specifically said she wants the top job, but she, as the former finance minister, is clearly one of the most senior and most visible candidates. We also have the former Bank of England and former Bank of Canada governor Mark Carney floating around in the background. He is a character that’s still very significant within the Canadian political spectrum. He’s said he is considering it, but whether he will actually enter into the ring is still to be decided at this stage.
Kasia Broussalian
But once a new leader is in place, what’s going to be the top of their list to tackle?
Ilya Gridneff
Well, staying in power, obviously, once the leader gets into position, they don’t really have a very comfortable journey ahead because the political dynamics at play are so bad for the government that it looks like they will face immediately a vote of no confidence. And that could trigger a national election, which has also been in the background of this political drama because Trudeau had to call an election at some point before October 2025 and for the Liberal government. All the polling shows that they’re gonna be decimated in the election in the coming months.
Kasia Broussalian
So an election year, no matter what happens now, if the Liberal party were to lose that election like it’s expected, how would that shift the direction that Canadian politics has basically gone since Trudeau took power in 2015?
Ilya Gridneff
Well, there’s definitely going to be a shift towards the right. The Conservative party and the Opposition leader Pierre Poilievre is very comfortable talking about common sense values, talking about oil and gas, that sort of drill, baby drill ethos. It’s definitely going to be a sense of undoing a lot of what Justin Trudeau stood for in that liberal ethos of trying to promote social justice and progressive values. There’s a lot more about business, a lot more about making housing affordable. But there hasn’t been much clarity as to how Conservatives are going to do that.
Kasia Broussalian
Ilya Gridneff covers Canada for the FT. Thanks, Ilya.
Ilya Gridneff
Thank you.
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Kasia Broussalian
Meta has just announced a bunch of changes to how it moderates content. In a video posted yesterday, CEO Mark Zuckerberg said that Facebook and Instagram will now rely on its users to flag misinformation.
Mark Zuckerberg audio clip
First, we’re gonna get rid of fact-checkers and replace them with community notes, similar to X, starting in the US.
Kasia Broussalian
The tech giant is also stripping back its rules about what people can or can’t say.
Mark Zuckerberg audio clip
We’re gonna simplify our content policies and get rid of a bunch of restrictions on topics like immigration and gender that are just out of touch with mainstream discourse.
Kasia Broussalian
This pivot has a lot to do with Donald Trump returning to office. The US president-elect has accused Meta of censorship in the past, but now it seems like Zuckerberg has been trying to rebuild that relationship. He’s visited Trump at Mar-a-Lago and Meta has donated to inauguration events.
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The US IPO market is starting to pick up momentum. Private equity groups are looking to offload some of their flagship holdings and take advantage of a solid stock market. This comes after a three-year drought in public offerings. So yeah, Wall Street is pretty excited about all this. Here to tell us more is the FT’s Nick Megaw. Hey, Nick.
Nick Megaw
Hey.
Kasia Broussalian
So can you give me a sense of scale here? Just how big is this revival?
Nick Megaw
Yeah. I mean, it kind of depends on what you’re measuring it against. So no one is saying we’re gonna go back to the kind of crazy boom of 2020 and 2021 where the peak is like $150bn raised in US IPOs in 2021. But what most people at the minimum are expecting is for us to get back to a sort of pre-pandemic normal level, which doesn’t sound that spectacular. But after the last couple of years, people would really welcome it.
Kasia Broussalian
Yeah. And like I mentioned, we’re now at this stage where private equity firms are ready to trim their portfolios. Why do they want to do that now?
Nick Megaw
There’s kind of a couple of factors at play here and why they’re expected to lead the way. One is, frankly, they’re under pressure from their own backers because there haven’t been many IPOs or much mergers and acquisition activity in the last few years. They’ve got a lot of kind of older funds that the investors in that are wanting money back. And so they’re under pressure basically to find ways to monetise their holdings and return some cash back to their backers. In particular, a lot of their holdings are really big, kind of too big in many cases to easily sell on in one big chunk. And so an IPO is the preferred way to raise cash flow. And at the same time, there’s also a demand side issue, which is investors got burned during the downturn the last couple of years. They’re still cautious. And although things are getting better, they would prefer to avoid a repeat of that. And so they prefer the kind of larger, more profitable, maybe slightly slower growing, but safe companies that tend to be private equity-owned.
Kasia Broussalian
And what about the stock market here? What sort of role has it played in pushing these PE firms to get back into, you know, business as usual when it comes to IPOs?
Nick Megaw
Yeah, The other factor is just it’s been a great year for US stocks. The S&P 500 has been hitting new highs, but a lot of that in the first half of 2024 was being driven by a couple of very large companies. In the second half of 2024, that broadened out a bit so across lots of different sectors, valuations have got better. For smaller companies as well, valuations have got better and so it looks a much more attractive market to go into.
Kasia Broussalian
Now, do you think this revival is going to continue and we’ll just see more and more IPOs every year?
Nick Megaw
In general, the expectation is there should be a kind of steady improvement, at least in the medium term. But as we have seen repeatedly in the last couple of years, there are plenty of potential shocks that could derail things. The IPO market is very momentum-driven. So if things start going well, but then some of the first couple of big deals come out and then stock market tanks for reasons potentially unrelated to the deals themselves that can just cause everything to grind right back to a halt.
Kasia Broussalian
Nick Megaw covers US capital markets for the FT. Thanks, Nick.
Nick Megaw
Thanks.
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Kasia Broussalian
You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
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