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Post says for TSX-V, bottom looks like up

2014-12-10 09:13 ET - In the News

The Financial Post reports in its Wednesday edition the S&P/TSX Venture composite index sunk to a low of 675.10 on Tuesday. The Post's Peter Koven writes that is the lowest level the index has ever traded at, dating back to when TMX Group founded the TSX-V in 2001. In December, 2008, its lowest close was 684.88. This dreadful performance reflects the fact that junior resource plays have fallen badly out of favour with investors. "The juniors have been in the garbage can, and they're now falling through the bottom of the garbage can," said newsletter writer John Kaiser. When markets turn volatile, small-cap stocks tend to get hit the hardest as investors look for quality. These tiny resource firms need capital to keep their projects moving forward, and investors simply do not want to give it to them. According to TSX data, the median market value of companies in the Venture index is $1.7-million, meaning half of them are worth less than that. The lack of liquidity in most TSX-V stocks is one of the biggest concerns. Canadian retail investors used to trade these stocks aggressively. No more, thanks to "bad demographics," according to Mr. Kaiser. "They're retiring, and they're becoming more risk-averse."

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