The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
During last year’s plunge in commodity prices, the global benchmark exchange for junior resources recorded its lowest average daily trading volume in over a decade. In fact, the last time volume was this low on Canada’s TSX Venture index was in 2005, before iPhones even existed.
Data for this year is not so hot, either.
With an average of 51 million shares exchanging hands daily in the first 14 trading days of 2016, the volume is 16.6% lower than 2015.
For most people, this is unsurprising, since the Venture index is now in a historic 1,200 day bear market.
Courtesy: Palisade Global
With no near-term upturn in commodities in sight, the sector finds itself between a rock and a hard place.
The TMX Group, the parent company of the exchange, has even recently published a white paper on ways to potentially revitalize the exchange. Goals of the group include significantly reducing the cost burden on issuers without compromising investor confidence, expanding the base of investors financing companies and enhancing liquidity, and diversifying the stock list to increase the attractiveness of the marketplace.
Critics will argue, however, that the problem of zombie companies cannot be simply solved by any combination of the measures that the TMX Group is willing to take. Reinstatement of the “uptick rule”, reforms on accredited investor regulations, and even bans on short-selling have been proposed by those that argue a greater course of action is needed.
Read more at the original source: http://www.visualcapitalist.com/canadian-venture-stocks-trade-lowest-volume-in-a-decade/
1,200 days and counting and the greatest loss in the TSX Venture’s 25 year history.
For those who follow this chart, we have extended the time frame to now include the defunct Vancouver Stock Exchange (VSE), a bourse that catered and serviced the junior mining frenzy during the early 90s. We also classified a bear market as a loss of 20% or greater over a period of least two months.
Brief History Lesson Of Canada’s Venture Exchanges
In 1999, the Vancouver Stock Exchange merged with the Alberta Stock Exchange and the Winnipeg Stock Exchange, along with the micro-cap stocks from the Bourse de Montréal to create the Canadian Venture Exchange (CDNX), an exchange for emerging companies too small to make it to the big boards.
In 2001, the Canadian Venture Exchange was acquired by the TMX Group, owners of the Toronto Stock Exchange, and rebranded to the TSX Venture Exchange.
With the data of each exchange in hand, we were able to normalize the indices to produce one index to rule them all.
The key takeaway is that the Index has never been this low.
But how much longer can this go on for?
We do not know for sure, but 2016 and onward look to be filled with economic uncertainty and volatility, both ingredients to fuel a comeback in gold. Let’s see what’s on the docket:
- Oil’s demise – Even with continual Middle Eastern instability
- Student debt crisis – Now at $1.3 trillion
- Growing sub-prime auto loans – 40% of all auto loans are now subprime
- Technology bubble – Over the top valuations, capital drying up
- Leveraged ETFs and its ability to exaggerate financial volatility
Gold will always remain a safe haven and all charts and signs point to recovery. Here’s to a bull run in 2016!
On another note, we are happy to announce our successful rebrand to Palisade Global Investments, please check out our new site: www.palisadeglobal.com.
Read more at the original source: http://palisade-research.com/tsx-venture-bear-market-update-now-at-1200-days-and-counting/