Canada is known around the world for its natural resources, which makes it an important destination for international investors. While the country has a number of different stock exchanges, the most popular is the Toronto Stock Exchange ("TSX"), which is the third largest in North America and seventh largest in the world by market capitalization.
Given Canada's extensive natural resources, the TSX houses more mining and oil and gas companies than any other exchange in the world. These securities consist of not only common stock, but also exchange-traded funds ("ETFs"), income trusts, split share corporations and investment funds, providing international investors with many different options.
The exchange's hours are from 9:30am until 4:00pm Eastern Time, with a post market session from 4:15pm until 5:00pm Eastern Time on all days of the week except Saturdays, Sundays and holidays declared by the exchange in advance.
Listing on the Toronto Stock Exchange
The Toronto Stock Exchange consisted of 1,569 companies, as of December 2012, worth a total of $2,149,171,000,000 in market capitalization. While the majority of these companies are based in Ontario (52%), a substantial portion of the exchange's market capitalization also comes from Alberta (25%) due to the region's greater amount of natural resources.
The exchange's breakdown of sectors by market capitalization shows a skew towards financial services (24%), mining (18%) and oil and gas (6%), while the mining industry consists of about 23% of the total, or 364 companies, listed on the exchange. Many of these companies consist of so-called junior mining companies focused on developing natural resources.
Listing requirements on the Toronto Stock Exchange vary based on the type of company seeking a listing. For instance, mining companies must meet certain property, work program, and working capital requirements before listing, while oil and gas companies have only working capital and financial requirements that must be met.
Investing on the Toronto Stock Exchange
Canadian stock markets are very accessible to U.S. markets, especially when compared to many other exchanges around the world. While direct investment on the Toronto Stock Exchange is relatively easy to accomplish, many companies also dual list on U.S. stock exchanges, making it even easier to invest in the same companies on domestic exchanges.
Investing in TSX-listed companies can be accomplished through most online brokerage accounts, such as TD Ameritrade or E-Trade. Commissions may be more than domestic trades, but remain reasonable compared to many traditional stockbrokers. However, investors should be sure to consult their accountants or investment professionals to learn of any tax implications.
Those looking to invest in Canadian companies trading on U.S. stock exchanges can look into American Depository Receipts ("ADRs") that are available for many larger companies. These securities trade like traditional stocks, mimicking the price movements of the foreign listed shares, but tend to be slightly less liquid at times than their TSX-listed counterparts.
Popular Stocks Listed on the S&P/TSX 60
The Toronto Stock Exchange attracts many of the world's largest natural resources companies, making it a popular destination for international investors. Investors can find many of the most popular companies listed on the exchange by looking at the S&P/TSX 60 Index, which consists of the 60 largest companies listed on the exchange by market capitalization.
Some of the largest companies include:
- Royal Bank of Canada (RY)
- Toronto-Dominion Bank (TD)
- Suncor Energy Inc. (SU)
- Barrick Gold Corp. (ABX)
- Potash Corp. of Saskatchewan (POT)
Investors can also consider purchasing the iShares S&P/TSX 60 Index Fund (XIU) that trades on the Toronto Stock Exchange or one of many Canadian ETFs trading on U.S. exchanges.