Exchange Insights from TSX and TSXV

Trading with the world

In the midst of a prolonged period of economic uncertainty throughout the world, offshore investors continue to hold Canada in high regard.

The country’s banking system has been ranked for four consecutive years as the soundest in the world by the World Economic Forum, while Forbes Magazine places Canada at the top of the list of the best countries for business. It has the lowest debt-to-GDP ratio of all G7 countries, and has nurtured a strong equity culture.

“The world’s retail investors look favourably at what Canada offers and want to be part of it,” says Robert Fotheringham, Senior Vice President, Equities Trading, TMX Group.

With its economic stability and well-regulated investment environment, Canada ranks among the top destinations in the world for global investment dollars, and TSX and TSX Venture Exchange (TSXV) actively cultivate the participation of offshore investors in Canada’s equity markets.

“We’re working hard to attract new investment flows to Canada,” says Fotheringham. “It makes trading more efficient and exposes our listed companies to a global marketplace.”

Every day, up to 40% of trading on TSX originates from international brokers, such as UBS, Morgan Stanley and Barclays Capital. As participating organizations of TSX and TSXV, these global firms also service the domestic marketplace in offshore countries, enabling their retail investors to trade stocks listed in Canada.

Domestic banks such as BMO, which operates in China, and Scotiabank, with its extensive Latin American network, also facilitate trading by offshore investors.

To raise Canada’s profile among offshore investors and draw more attention to the almost 4,000 listings on TSX and TSXV, the exchanges conduct seminars and information sessions throughout the world. “We focus on China, Hong Kong and Singapore,” says Fotheringham, “and we also attract capital from Russia, the UK and the US.”

Investors in these countries hear a compelling story about Canada. Not only is Canada the fourth-largest equity market by float capitalization in the MSCI World Index, it has also been the global exchange leader in new listings for the last three years.

Also of note is that approximately 90% of all global equity financings in the mining sector were done on TSX and TSXV in 2011, accounting for nearly 40% of the world’s mining equity capital. In commodities, Canada ranks among the world’s top producers of zinc, uranium, gold, nickel, aluminum, lead, potash and canola.

TSX and TSXV are also leading the world in the number of listed oil and gas companies, and clean technology stocks as well.

With listings extending to technology, life sciences, diversified industrials and financial services, TSX and TSXV are like a retail store stocked with more than 3,800 diverse products, where offshore investors are invited to shop.

For offshore corporate investors, TSX and TSXV offer opportunities for joint ventures and other cooperative arrangements. “We share a similar climate, culture and commodity base with Russia, for example,” says Fotheringham. “China finds Canada attractive as well, because that country needs a lot of the commodities and other resources that we have in abundance.”