After a year of poor stock sales, Canada's largest exchange saw a rebound as copper and gold prices soared and mining companies raised capital.

According to data from exchange operator TMX Group Ltd., the total financing volume of the Toronto Stock Exchange jumped 98% from 2.5 billion Canadian dollars to 4.9 billion Canadian dollars (3.6 billion US dollars) in the first four months of this year. After a year of historically sluggish stock market financing activity, the largest Canadian exchange saw a significant increase in funding volume.

According to the data, First Quantum Minerals Ltd. (First Quantum Minerals Ltd.) first issued 1.55 billion Canadian dollars in shares in February and then traded 431 million Canadian dollars earlier that month, including new shares of Capstone Copper Corp. and existing shares of a group of shareholders.

Transactions accelerated in April. 58 transactions raised a total of 1.6 billion Canadian dollars, up from 21 transactions in the same period last year, and raised only 556 million Canadian dollars.

Michelle Khalili, managing director and global head of equity capital markets at Scotiabank, said: “Despite a quiet start to 2024, Canadian stock issuance improved this spring and has maintained this trend since May.” She believes that increased confidence and the choice of timing to cut interest rates will further accelerate the pace of stock issuance for the rest of the year.

The increase in share sales was mainly driven by mining companies. So far this year, mining companies have dominated the financing of the Toronto Stock Exchange and GEM Exchange. They raised 4.4 billion Canadian dollars in the first four months of this year, accounting for 71% of the total amount raised of 6.2 billion Canadian dollars during the same period.

Mining companies dominate Canadian stock issuance

As the financing boom began, copper and gold prices both hit record highs this year and continued to trade at high levels. Raw materials stocks hold 12% of the weight in the S&P/Toronto Stock Exchange Composite Index. It is the index's best performer among the 11 industry sectors this year, with an increase of 19%, compared to a 6.4% increase in the Canadian stock market.

Robert Peterman, vice president of global business development and capital formation at TMX Group, said that in a typical year, mining offerings will account for around 25% of total Canadian financing, making the group's dominant position in the industry so far this year “very high.”

In fact, the largest transactions since this year have mainly occurred in the raw materials sector, led by First Quantum Mining and Capstone Copper. Real estate company Colliers International Group also raised about $405 million in February.

There are signs of a rebound, but TMX remains cautious.” We see signs that the situation is improving, but it is difficult to predict that the financing data for May will be higher than in April,” Peterman said, adding that “real momentum” in the Canadian ECM sector will be accompanied by a clearer signal that interest rates will fall.

Daniel Nowlan, Kookmin Bank Finance Vice Chairman and Managing Director of Equity Capital Markets, said the increase in issuance volume was a “good sign.” The bank's ECM department saw more stable flows and larger transactions, raising about twice the total amount raised in 2023. However, he pointed out that the total weekly trading volume of 200 million Canadian dollars is still below the typical level of 1 billion Canadian dollars per week.

“This year is still a long way from a normal year,” Nowlan said. “We haven't reached that point yet.”