Mining Returns to Centre Stage
The TSX30 program launched in 2019 to provide investors with another window into important market trends that may be overlooked by the indices or ETFs. While past performance is no guarantee of future results, there are some important observations as we look forward beyond post-COVID normal.
Growth and Value for Investors
Precious metal prices (particularly gold prices) have been on a steady climb for some time now, and equities appear finally to have joined the trend. We expect this trend to continue with observed growth in the number of equity financings; amount of capital raised; and the overall number of new listings. It is also encouraging to see this heightened investor interest in our market extending beyond TSX and into TSX Venture Exchange (TSXV), which is dominated by exploration and development stage mining companies.
In fact, half of the 14 mining companies recognized on the TSX30 ranking this year started out on the TSXV, where they grew and eventually graduated to the TSX. This only highlights the value of our world-leading two-tiered equity markets system.
Clearly, investors appear to have renewed their interest in the mining sector. Not just specialist investors, (who have long waved the flag for hidden value within the sector), but extends to the generalist investors searching for growth and value investment opportunities. Earlier in 2020, for example, sector headlines focused on Berkshire Hathaway™, amongst the world’s most famous value investors, making an historic first investment in our sector via Barrick Gold Corporation (TSX: ABX). This is likely not a coincidence.
Transforming the Mining Sector
Over the past four years, the mining sector has been transforming itself (Mining 2.0), as companies attempt to correct past missteps. Mining companies have improved their balance sheets, provided better communication with investors, and have embraced corporate social responsibility initiatives such as Environmental, Social and Governance (ESG) as key business success factors. We believe investors are now recognizing and evaluating mining companies not only on commodity exposure levels; but also as well managed investment opportunities with tremendous value and growth opportunities.
As the Mining 2.0 transformation spreads and extends further into early exploration stage companies, investment opportunities in the sector (for even generalist investors) may now only be scratching the surface.
We continue to empower our issuers for this new paradigm; so they can exceed investors’ and stakeholders’ expectations through relentless innovation. This year, for example, we launched an ESG 101 hub that focuses on resources and information for our issuers.
As we celebrate the 2020 TSX30, these industry trends, together with other mainstay measures such as productivity, innovation and the decarbonization agenda, may reveal interesting insights for future investment opportunities and for portfolio diversification.
TSX30 is a ranking of the 30 top-performing stocks on the TSX based on 3-year dividend-adjusted share price performance. See the full rankings and methodology at tsx.com/tsx30.
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