What happened: New data shows value of B.C.’s public companies has rebounded since outset of pandemic
Why it matters: COVID-19 left markets uneasy early on but gains have been consistent since
Like water off a duck’s back, the economic uncertainty that rattled markets at the outset of the pandemic appears to have had little lasting impact on the value of B.C.’s publicly traded companies.
Market capitalization for public companies based on the West Coast sank at the outset of the pandemic, falling from $194 billion in December 2019 to $144 billion by March 31, 2020, according to a report released Tuesday (September 15) by the B.C. Securities Commission (BCSC).
But that 26% plunge has since been wiped away, with market capitalization for local firms sitting at $212 billion as of June 30 — up 9% from just prior to the pandemic.
John Hinze, the BCSC’s director of corporate finance, described the numbers as a “promising sign of strength” for the province’s venture market.
The province’s knack for raising money amid COVID-19 has been documented by other organizations as well.
Last week CPE Media Inc.’s analytics division released data showing venture capital investments on the West Coast totalled $553 million from the start of 2020 through to June 30.
That’s up 31% from the same period in 2019 when the province tallied $422 million in venture capital investments.
And those figures stand in contrast to national trends, with Canada experiencing an 11% annual decline to $2.59 billion during the first half of 2020.
One possible explanation for B.C. defying national downward trends is the source of the capital.
Ontario and Quebec — home to the top-performing companies so far this year with venture capital raises totalling $1.048 billion and $700 million, respectively — are far more reliant on domestic investors.
Domestic investors accounted for 59% of investment sources for Ontario during 2020 H1 and 85% for Quebec.
B.C. companies, meanwhile, received just 28% of investment from domestic sources compared with 51% from the U.S. and the remaining 21% from other foreign sources.
Meanwhile, the BCSC report also found the B.C. capital market raised a record $104.9 billion by the end of 2019 — up about 1% from a year earlier when $103.9 billion was raised.
Those figures include capital-raising by B.C. companies and investments funds, and capital invested outside the province by B.C. residents and companies.
Banking and finance was responsible for raising the most capital at $11.8 billion last year, up 39% from a year before.
Real estate capital declined 16% to $5.7 billion — a notable drop but still one of the top-performing sectors.
Mining raised $3.8 billion in 2019, down 18% compared with a year earlier.
“The mining sector remains the most active sector with the largest number of active companies and the largest total amount raised,” the BCSC report concluded.
“The 589 BC mining companies that raised capital accounted for 21% of the capital raised by B.C. companies.”
The largest B.C. companies by market capitalization were Lululemon Athletica Inc. (Nasdaq:LULU) at $33.1 billion, Telus Corp. (TSX:T) at $28.3 billion, Wheaton Precious Metal Corp. (TSX:WPM) at $17.3 billion and Teck Resources Ltd. (TSX:TECK.B) at $5.9 billion.