Legal Research

Canada Best Market for Business Access to Capital in 2008

By Bernard Pinsky

Surprise, surprise. Canada, with its stable equity market and a sound economic policy framework, was able to withstand some of the global credit market issues and moved to first place in the Milken Institute?s 2008 Capital Access Index.

The Index looks at such factors as macroeconomic environments, financial and banking institutions, the development of the equity and bond markets, and alternative capital sources. Because a firm’s access to capital allows it to implement innovative ideas and contribute to technological advancement, job creation and quality of life, the index is a tool for measuring how countries can act to reduce more fully their lending barriers. There are 122 countries ranked in the index, based on the availability of accurate and adequate data.

What does this mean on a practical level? To me it means that companies worldwide looking to access capital should start by contacting Canadian brokers, banks, venture capitalists and professionals who have access to those targets. The companies don?t need a pre-existing Canadian aspect to them: that aspect can be created, such as a listing on a Canadian stock exchange. This was made evident, when, for example, a Chinese construction company listed on the TSX Venture Exchange in a $60 million transaction and raised much need expansion capital at the very bottom of the stock market, in early March 2009.

The Capital Access Index ranks countries around the world in terms of the financial infrastructures that support entrepreneurial activity by providing access to capital. The index is unique in the breadth of economic factors and financial instruments that are analyzed and its reliance on quantitative, not qualitative, data.

The Capital Access Index top 10 markets in 2008 (with 2007 rankings) are:

1. Canada (4)
2. ?Hong Kong SAR (1)
3. ?Switzerland (7)
4. United Kingdom (2)
5. ?Singapore (4)
6. ?United States (11)
7. Netherlands (15)
8. Norway (9)
9. ?Australia (8)
10. ?Finland (9)

The credit and mortgage market turmoil created a drag on bond markets, which impacted the rankings of many markets. Canada took first place from Hong Kong, which had dominated the Index in prior years.

Full post as published by Slaw.ca on June 22, 2009 (boomark / email).