THE total value of British Columbia’s publicly listed companies dropped 26 per cent in the first few weeks of the COVID-19 pandemic, but then climbed above December 2019 levels, according to a new report from the British Columbia Securities Commission (BCSC).
Market capitalization dropped from $194 billion in December 2019 to $144 billion by March 31, reflecting the significant impact of the pandemic on the global financial markets. As of June 30, the total market value of B.C. companies had recovered, growing to $212 billion.
On Tuesday, the BCSC published its 2019 BC Capital Market Report. The report provides a snapshot of the province’s capital market activity in the 2019 calendar year, detailing how much money was raised by companies and investment funds in B.C., as well as how much was invested by B.C. residents, companies and other entities. To reflect the significant impact of COVID-19 on the capital market, sections of the report were expanded to include available figures for March 31 and June 30, 2020.
Overall in 2019, the B.C. capital market – which includes capital-raising by B.C. companies and investment funds, as well as capital invested outside B.C. by B.C. residents, companies and other entities – grew 1 per cent to $104.8 billion, setting a new record for the third consecutive year.
The bulk of the report tracks capital-raising by B.C. companies and investment funds, showing it fell 14 per cent in 2019, with mining and other resource, real estate, and technology sectors continuing to be key. B.C. companies raised $16.9 billion in 2019, 12 per cent less than the year before, while B.C.-based investment funds raised $15.1 billion, a 17 per cent decrease. The decrease is due partly to a 50 per cent drop in capital-raising in the cannabis sector, to $2.1 billion, after a record $4.2 billion was raised by that sector in 2018.
The report provides details of capital-raising for B.C. companies in other sectors:
- Mining: Capital-raising decreased 19 per cent in 2019, but still remains the largest capital-raising sector, with the most number of companies. Five hundred eighty-nine mining companies raised $3.6 billion in capital, accounting for 21 per cent of the capital raised by B.C. companies.
- Real estate: Capital-raising declined 22 per cent, attracting $2.8 billion in investment, in part due to two unusually large transactions in 2018.
- Technology, communication and entertainment: Capital-raising increased in 2019, as it did in 2018, primarily due to Telus Corporation completing significant financings in both years.
The annually produced report shows that B.C. is home to 44 per cent of all companies listed in Canada, including more than half of all Canadian-listed venture companies, reflecting B.C.’s role as an incubator for new and growing businesses. As a result, B.C.’s companies tend to be smaller, with over half having a market value below $5 million.
“B.C.’s listed companies have not only weathered the initial effects of the COVID-19 pandemic, but have grown their total market value compared to the end of last year,” said John Hinze, the BCSC’s Director of Corporate Finance. “This is a promising sign of the strength of our venture market, and its ability to contribute to economic growth for BC and Canada.”