Why Axis

Canada’s tech and innovation sector had a good 2020 in the markets—and cleantech led the charge

A man watches the financial numbers at the TMX Group in Toronto's financial district on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese

VANCOUVER — When the COVID-19 pandemic started to sow economic uncertainty in early 2020, stock markets around the world plummeted in a short-lived fall. Technology shares, overall, helped fuel the recovery with the companies’ products and services in demand in the new world of social distancing.

On the TSX, companies in the technology and innovation sector performed strongly as a group, but those in the cleantech category led the charge. Shares of listed companies in the space, on average, roughly doubled their worth. 

Here’s a look at how the three sectors—cleantech, life sciences and technology—performed in what was a record-breaking 2020 for technology stocks, and what experts think the next 12 months will hold.

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Talking Point

Companies listed on the Toronto Stock Exchange in the cleantech, life-sciences and technology sectors gained, on average, 55.9 per cent of their worth in the 2020 calendar year, according to The Logic’s analysis. The clean-technology subsector showed the greatest movement, up an average of 108 per cent.

Companies listed on the Toronto Stock Exchange in the cleantech, life-sciences and technology sectors gained, on average, 55.9 per cent of their worth in the 2020 calendar year, according to an analysis by The Logic

The clean-technology subsector showed the greatest movement, up an average of 108 per cent, followed by technology at 80.8 per cent. Life sciences came in last place at nearly seven per cent.

“Cleantech has actually been an underappreciated return of the last number of years,” said Dani Lipkin, director of global business development for the TSX and TSX-V, in an interview with The Logic. The 10-year annualized total return on the S&P/TSX renewable-energy and clean-technology index is 12.5 per cent. Last year, it was “phenomenal” at roughly 74 per cent. That growth comes from Canada’s positioning as a global leader in this space, he said, as well as other factors, such as the amount of money being invested in this space. Ballard Power “has a nice huge run in 2020 that has propelled a lot of it,” he said. The Vancouver-based fuel-cell power provider saw a nearly 221 per cent share-price gain last year.

Within the cleantech sector, companies listed in the waste-reduction and water-management subsector experienced the largest share-price gains, at an average of about 349 per cent. Those working within energy efficiency came in second at 181 per cent, while the remaining three subsectors saw gains of between 50 per cent and nearly 87 per cent. 

Companies listed in the technology sector saw their shares nearly double in value, on average, according to the analysis. They gained about 81 per cent. Two of its largest winners were big names Shopify and Dye & Durham. (Remove Shopify from the equation and the sector still saw a rise of nearly 79 per cent.)

“It’s not really just a one-year theme. This [is] really a five-year trend, that the tech index in Canada has actually been outperforming major indices across North America,” said Lipkin. The five-year annualized total return on the S&P/TSX capped information-technology index as of Tuesday is 28.6 per cent, while the one-year return as of Tuesday is about 53 per cent.

That partly comes down to “a good quality of name,” said Lipkin, and that many of these companies have existed for more than a decade, with their leadership building them up over time. “Really, the attraction is that they’re taking the next step in their evolution and growing at even accelerated pace once they become public.”

The pandemic also prompted people and companies to adopt technology more quickly, he said, fuelling use of these companies’ products and services. It’s unlikely much of this technology that has increased productivity and ease of operations will be abandoned as the world emerges from the pandemic, he said, echoing a sentiment shared by some Canadian venture capitalists who shared their predictions for the year ahead with The Logic.

Markets have also been “very receptive to the technology names going public,” he said, somewhat inspired by Shopify’s story. The Ottawa-based company co-founded by Tobi Lütke—whom The Logic’s subscribers recently voted Canadian tech founder of the year—became Canada’s most valuable public company earlier this year. The tech sector saw some blockbuster initial public offerings, including Montreal-based Nuvei. The payment-processing company’s first trading day on the TSX in September saw its shares gain more than 60 per cent, setting the record for the largest-ever public debut by a tech firm on the TSX.

Among technology subsectors, the blockchain and cryptocurrency space saw the largest growth, at just over 226 per cent, followed by companies in the internet, software and services space, which totalled about 165 per cent. Only the hardware and equipment subsector registered a loss, down nearly two per cent.

The life-sciences sector was a mix, with the health-care-technology, biotechnology, and health-care-services and -supplies subsectors in the black, with gains of about 61 per cent, 59 per cent and 17 per cent, respectively.

The COVID-19 pandemic provided a bump to life-science companies in general. Venture capital funding for companies in the pharmaceuticals and biotech sectors made up 12.5 per cent of all deals from Canadian VCs in 2020, up from 8.1 per cent in 2019 and 2.2 per cent in 2018, according to PitchBook data. Several Canadian biotech firms also chose to go public during the pandemic, with Vancouver-based Abcellera closing a record-breaking IPO on the Nasdaq. It raised about US$555.5 million in gross proceeds. 

The pharmaceutical, medical-marijuana, health-care-facilities and -equipment, and CBD subsectors dragged down the life-sciences story. These experienced losses of about 27 per cent, 38 per cent, 30 per cent and 58 per cent, respectively.

Lipkin believes the momentum will continue into 2021. “I think that we’re going to continue to see the growth in the sector overall in terms of financing, listing, the growth in revenue,” he said. As of Nov. 30, 2020, companies listed on the TSX and TSX-V in the technology sector raised $7.4 billion, according to TMX data. That’s up from $2.2 billion raised in the same period in 2019. That comes from initial public offerings and follow-on offerings, he said.

But the space, specifically the S&P/TSX information-technology subsector, is unlikely to repeat its 2020 performance this year, wrote Paul Treiber, an RBC Dominion Securities analyst, in a note Monday. “The S&P/TSX Information Technology sub-sector materially outperformed in 2020, with the highest returns since the dotcom boom in 1999,” he wrote, which reflects growth from some of what he calls secular growth stocks, or those with greater than high-single-digit organic growth, such as Shopify.


The Logic analyzed 140 companies listed on the Toronto Stock Exchange that operate in the clean-technology, life-sciences and technology industries. It excluded some with preferred shares. It calculated the companies’ share-price change using each share’s closing value on its last trading day of 2019 compared to 2020. For companies with shares that did not trade for the entirety of the year, the analysis calculated the share’s change from the closing price of its first trading day.

“COVID-19 has led to the increased adoption of certain technologies,” with some moving from about zero per cent adoption to about 100 per cent. “Many of these changes are structural and likely to persist in the future; however, we believe growth will decelerate in 2021 as usage drops to something less than ~100% (though still well above prior usage), as users shift some of their activities back to previous practices given reduced lockdowns due to availability of a COVID-19 vaccine.”

These shares “may hold their new elevated valuations given long-term structural trends and increased strategic value of their solutions. However, these names also face the challenge of decelerating growth and more difficult comparisons in 2021.”

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Canadian software consolidators—companies that consolidated assets in software- and information-technology-service markets—should perform better this year, though, he wrote. This group of companies faced headwinds partly due to a reduced pace of acquisitions in 2020, and should see more acquisitions this year.