A new analysis of Canadian capital markets shows a marked contraction in the number of companies entering public equity markets. Data from a report by the Fraser Institute indicates that the count of initial public offerings on Canadian stock exchanges has dropped by about 94 per cent compared with levels observed in the early 2010s, with the number of new public listings falling from dozens per year roughly a decade ago to only a handful in recent years.

The study, published in December by the Vancouver-based policy research organization, also finds that the total number of publicly traded Canadian businesses on the Toronto Stock Exchange and its venture counterpart has declined by nearly one-third since 2010. Over that period, the number of companies listed on the country’s major exchanges fell from more than 3,100 to just over 2,100, reflecting long-term structural shifts in capital markets.

According to the report, several factors have contributed to the diminished role of public equity markets in Canada’s economy. Mergers and acquisitions have consolidated many previously listed firms, while the rapid growth of private equity has provided alternative avenues for raising capital outside public markets. Rising regulatory and compliance costs for public companies have also been cited as a factor in the decision by many firms to forgo entering the public domain.

Industry analysts have noted that the decline in new listings has implications for investment access and broader economic dynamism. Public stock markets traditionally serve as a mechanism for businesses to secure funding and for a broad base of investors to participate in economic growth. A reduction in fresh listings constrains those functions and can narrow the range of investment options for retail investors.

The Fraser Institute report argues that policymakers and market participants should consider adjustments to regulatory frameworks and business environment conditions to support revitalization of Canada’s public capital markets. The report points to the need for a more conducive climate for business investment and growth if the country’s equity markets are to regain vibrancy.