Canadian Share Market Struggles Amid Trade War Despite Metals Deals

03 Apr, 2025

Canada’s equity market struggled in the first quarter due to trade tensions with the US, limiting share-sale activity despite a surge in precious metals deals. Companies listed in Canada raised just $2 billion, a sharp decline from $2.9 billion in the same period last year, as volatility discouraged dealmaking. Market fluctuations from the US-Canada trade war have made it difficult for investment bankers to execute deals, leading to a cautious approach.

Grant Kernaghan, CEO of Citigroup Global Markets Canada Inc., noted that unpredictability in valuations has dampened investor sentiment. This uncertainty has also delayed IPOs and slowed overall market activity, as companies hesitate to sell shares due to price fluctuations. Investment bankers have been highly selective about deal timing, further constraining activity.

Despite the overall slowdown, some successful deals have taken place. Swiss Re’s C$655 million sale of a 10% stake in Definity Financial Corp. was well-received, demonstrating that under the right conditions, significant transactions can still be executed. However, such deals require precise timing to navigate volatile market conditions effectively.

One sector that has remained resilient is precious metals mining. Precious metals firms raised $1.1 billion in the first quarter, more than four times the amount raised in the same period last year. The largest deal so far was Discovery Silver Corp.’s C$247.5 million equity raise, driven by strong gold prices.

According to Mike Wang of Periscope Capital Inc., the materials sector remains an attractive space for investment, unlike other industries that continue to struggle with market uncertainty. While select mining companies can still raise equity successfully, overall dealmaking remains challenging outside of this niche.

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