Trying to keep Canadian stocks Canadian

There are many reasons to be proud to be Canadian, but some Canuck companies are feeling a lot less patriotic when it comes to going public these days.

Driving the news: Almost two dozen companies with Canadian HQs that have gone public since 2020 gave the Toronto Stock Exchange (TSX) the cold shoulder, choosing to list solely on flashier American exchanges, raising ~US$1.4 billion in the process, per Bloomberg

Life sciences and pharma companies have been the main culprits, leaving the TSX in the dust and heading to the Nasdaq to tap into its more robust base of investors, analysts, and bankers specialized in those sectors. Some natural resources companies have also dipped.   

Yes, but: The TSX has added 77 international listings over two years to pick up the slack and will soon welcome the Canadian market’s largest IPO since 2021 this year. New listings on the TSX also hit a seven-year high last quarter, with ~30 new listings hitting the index.

  • Buuuut, analysts are concerned about how much money these new IPOs will raise as most of them are ETFs, which simply don’t generate big-time fees.  

Why it matters: It's a worrying sign about Canada's investment climate that promising local companies are raising money elsewhere because they don’t feel they can get the support they need at home. And if these runaway companies do produce big returns down the road, they will mostly flow into American investors’ pockets.—QH