Do you know your Canadian stock market history?
On Friday, Canada celebrated its National Day, in honor of Confederation, which took place on July 1, 1867. The date is a public holiday and the Canadian stock exchange was closed.
Originally called Dominion Day, the official name of Canada Day was adopted in 1982 after the patriation of Canadian law earlier that year. The Canada Act, also known as the Constitution Act, gave Canada full independence by allowing the country to change its constitution without Britain’s approval. The law also contains the Charter of Rights and Freedoms, which sets out the constitutional rights of every citizen.
Canadian stock market history: The Canadian stock market was officially founded on October 25, 1861, nearly seven years before Nova Scotia, New Brunswick and what would become Ontario and Quebec were recognized by Britain as a nation. Sovereign and her first Prime Minister, Sir John A Macdonaldwas sworn in. The Canadian stock market dates back, albeit unofficially, to the year 1852, when 12 Toronto businessmen formed an association of brokers.
The first exchange, the Toronto Stock Exchange (TSX), traded a total of 18 stocks and at that time the trading day was only half an hour long. Most of the first publicly traded Canadian companies were related to banks and real estate.
This number has now grown to over 1,500 and the country has developed four other major exchanges: the Canadian National Stock Exchange (CNSX); the Montreal Stock Exchange (TMX); the TSX Venture Exchange (levels 1 and 2) and the NEO Bourse Aequitas. The Canadian Securities Exchange (CSE), which is operated by CNSX Markets, Inc, is also recognized. Launched in 2007 after being officially approved by the Canadian Securities Exchange in 2004, the CSE became the first exchange in 70 years to be recognized in Ontario.
Currently, the three largest stocks trading on Canadian stock exchanges are Shopify, Inc. STORE STORE, Royal Bank of Canada RY RY and Toronto-Dominion Bank TD TD.
TSX performance: more modestly than S&P500which has plunged more than 20% since the start of the year, the S&P/TSX Composite Index closed Thursday’s trading session down 11.6% from its Jan. 4 opening price.
In recent history, however, the TSX tracks the S&P 500 during bear cycles. When the dot-com bubble burst in 2000, the S&P 500 fell 43% against the TSX, which fell 45%. During the financial crisis of 2007, 2008 and 2009, the S&P 500 lost 56.86% between November 2007 and March 2009. In this case, the TSX was slower to react, reaching an all-time high in May and June 2008 but plunging 50.64%. between June 2008 and March 2009.
However, similar gains and losses in Canadian and US stock exchanges have not always been the case and are likely the result of the growing number of interlisted companies in both countries. For example, in the Great Crash of 1929, more than 2,000 American investment and brokerage firms went bankrupt, while no member of the TSX suffered the same fate.
Also Read: On Canada Day, Here Are The 5 Biggest Canadian-Based Gainers And Losers Trading On DAC Exchanges
Interesting facts: The Toronto Stock Exchange has always been a leader in many areas. The TSX was the first exchange in the world to use computer-assisted trading and the largest exchange to switch completely to electronic trading. The TSX was also the first to use decimal trading rather than fractions and the first to have a president. The stock exchange is currently the 11th largest in the world and the third largest in North America.
Photo: Courtesy of Joseph Morris on Flickr