After getting smoked in early March, losing about 10% in four trading days, the TSX Venture is crawling back. The exchange poked its head above 1,000 before settling at 994 Monday. What’s more, the exchange has traded into the green in 9 of the past 11 trading sessions. A quick glance at financing activity in January and February explains why sentiment remains positive.
If February is any indication, interest and financing activity on Canada’s junior exchange may be gaining momentum. According to TMX Group,
“Total financings raised in February 2021 increased 29% compared to the previous month, and were up 207% compared to February 2020.”
February Boasts $1.12 Billion in Total Financing Activity on TSXV
February 2021 saw a massive $1.12 billion in total financings raised on the TSX Venture. A large number by any measure, rising speculative capital reflects the current zero interest rate environment and continued retail investor renaissance taking place across North America.
When one considers that in February 2020, financings raised totaled just $367.7 million, the power of sentiment on the exchange comes into view. These kinds of surges in liquidity and risk-taking are what make investing in Canada’s small and micro-cap markets so exciting. One never knows precisely when the tide will turn and which sectors will ultimately result in a re-capitalization of the entire exchange.
The Venture averages well over 100 million shares per day traded – far and away above its average from six months ago.
One year ago, at the end of February 2020, the combined market cap for listed issuers on the exchange totaled $41.3 billion. At the end of February 2021, all issuers’ market cap on the exchange was a whopping $92 billion. The Venture is growing exponentially as investors globally, but particularly in North America, speculate and seek out yield in our zero interest rate environment.
As investors pour into TSX Venture financings, I have confidence that interest in these juniors will not go away overnight. Interest rates should stay low, and with international travel remaining essentially shutdown, investors have excess capital with which to invest. We are seeing this increased financing activity on the TSX Venture and will likely continue to see it throughout 2021. March data will be out the first week of April.