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Mid-Year Update: Technology and Innovation Sector on TSX

August 3, 2016

The technology and innovation sector on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) has continued to perform well in the first half of 2016, leading all sectors in growth by number of new listings and index performance.

Here are four key indicators to help frame how the sector – which includes technology, clean technology and life sciences – has performed over the last six months:

  1. Tech companies continue to go public. Since the start of 2016, 17 new technology/innovation companies have gone public on TSX/TSXV (to the end of June) - this represents nearly 60% of all corporate IPOs and new listings on our exchanges. These companies represent a mix of businesses from the technology (9), life sciences (6), and clean tech (2) sectors. They also include a mix of smaller companies (14 listing on TSXV) and larger businesses (3 listing on TSX). The activity in the technology and innovation sector in 2016 continues a multi-year trend on TSX/TSXV. Watch this brief video, which condenses the last seven years into 85 seconds.
     
  2. But where are the large Initial Public Offerings? Large and high-profile tech IPOs and follow-on financings on TSX have been notably absent this year. In this respect, Canada has followed the lead of the U.S. market, which has also seen a significant fall in IPO activity. "For many larger companies, this has allowed more time to prepare for an eventual TSX IPO," explains Michael Kousaie, TSX and TSXV's Head of Business Development for the Technology and Innovation sector. "Timing the market is difficult, but getting prepared to move when a market window opens is easier," he adds. For smaller companies, though, this has not had a significant impact as most small companies go public in Canada via a path other than an IPO.
     
  3. Tech index performing well. The S&P/TSX Capped Information Technology Index has outperformed the Canadian benchmark index over the last 1-, 3-, 5- and 10-year periods (to the end of June). The same index has also outperformed the S&P 500 Index over the last 1-, 3-, 5- and 10-year periods (also to the end of June).
     
  4. Outperforming global indices. The broad Canadian market has been one of the few stock markets globally to show positive returns in 2016 (as of June 30); and our main indices (the S&P/TSX Composite and the S&P/TSX Venture Composite) have outperformed all major global indices in 2016.

The key takeaway is that Canada's technology and innovation sector has continued to perform well in 2016 and we are hopeful that the momentum will continue to build for the balance of the year. We're also hopeful that improving market conditions will eventually support more large-cap IPOs in the sector.

For more information on the tech and innovation sector, please visit http://www.tsx.com/tech-is-back/, www.tsx.com/technology, www.tsx.com/cleantech and www.tsx.com/lifesciences