The TSX Venture is having one of its best starts to the year yet, both in terms of average market capitalization and financing activity.
Long-time readers will remember our research on seasonality factors that influence the TSX Venture. In a December 2020 article titled, “The Best Time to Buy the TSX Venture is Here,” we wrote,
“For the past seventeen years, on average, the TSX Venture has increased approximately 12.66% within 60 days following December 22nd. In almost a third of those years, the highest level hit for the Venture during those 60 days came in January (2008, 2010, 2013, 2015, 2018, and 2020).”
This year, the TSX Venture Index increased almost 30% from 829.97 to 1071.29 within the 60-day period from December 22nd, 2020, a record-high return for the period. The only year that came close to this return was 2008 (~23% return). And as broad market valuations on the Venture increase, so too has volume – the TSXV has regularly traded above ~150 million shares a day since the beginning of January.
Last but not least, this January was a blockbuster month for financings on the Venture. According to recent data provided by the TMX Group, TSXV-listed companies raised ~$870 million in January 2021, down approximately 9% from ~$960 million in December 2020, but up roughly 79% from ~$485 million in January 2020. For context, the only year where January’s financings were higher was 2018.
TSX Venture Captures Investor Attention in January
While there’s still time for the Venture to run higher in the remaining days of our oft mentioned “60-day period,” this January is already one for the books. With hundreds of millions of dollars flowing into TSX Venture-listed issuers and valuations steadily rising, 2021 is shaping up to be a breakout year for Canadian small caps.