Stock exchange participation falls, raising concerns over investment access and long-term growth
Canada’s public equity markets are showing clear signs of erosion, with the number of listed companies and new initial public offerings falling sharply over the past decade, according to a new report from the Fraser Institute.
The trend is fueling concern about the country’s broader economic health, particularly its weak productivity performance and chronically low business investment.
The report, Canada’s Shrinking Stock Market: Causes and Implications for Future Economic Growth, finds that the total number of companies trading on the Toronto Stock Exchange and TSX Venture Exchange dropped from 3,141 in 2010 to 2,114 in 2024, marking a decline of nearly one-third. IPO activity has deteriorated even more dramatically, falling from 67 new listings in 2010 to just four last year.
“Even though the value of the companies trading on Canada’s stock exchanges has risen substantially over time, there has been an alarming decrease in the number of companies listed on the exchanges as well as the number of companies choosing to go public,” says Ben Cherniavsky, co-author of the study.
At first glance, rising market capitalization might suggest healthy capital markets, but the report argues that fewer publicly traded firms signal deeper structural problems. Among the contributing factors are a surge in mergers and acquisitions, expanding regulatory and compliance costs, the growing dominance of index investing, and easier access to private sources of capital.
One of the most pronounced shifts has been the explosive growth of private equity as AUM in Canadian private equity funds has climbed from US$21.7 billion in 2010 to more than US$93.1 billion in 2024, diverting capital away from public markets.
“The shift to private equity has enormous implications for average investors, since it’s difficult if not impossible for average investors to access private equity funds for their savings and investments,” Cherniavsky says.
The authors emphasize that vibrant public markets are critical to economic expansion, helping growing businesses raise capital while offering Canadians a transparent and accessible way to participate in that growth. A shrinking stock market, they warn, risks limiting innovation, weakening productivity gains and narrowing investment opportunities for households.
To counter the decline, the report calls for policy reforms aimed at improving Canada’s investment climate. Recommendations include streamlining regulatory requirements for public companies, reducing disclosure burdens, and tackling the country’s persistent shortcomings in business investment and entrepreneurial activity.
“Public equity markets play a vital role in raising capital for the business sector to expand, and they also provide an accessible and low-cost way for Canadians to invest in the commercial success of domestic businesses,” says Jock Finlayson, senior fellow and co-author.
The sharp contraction in listings and IPOs, the report concludes, should serve as a warning signal. Without meaningful reforms, Canada risks further weakening its capital markets, and with them, its prospects for sustainable economic growth and rising living standards.
