Inflation has been the bane of all major equity markets during 2022, with major markets such as the S&P 500 down 19.4%, the Nasdaq down 33.0% and the Nikkei 225 down 9.4%.
Unsurprisingly, given the negative macro-backdrop, the mining and exploration sector across the globe has experienced negative pressure.
On the AIM market, mining financings for 2022 totalled just £363mln, down 62% from £950mln in 2021, and down a staggering 84% from the height of the mining boom in 2007, where mining financings on the AIM market totalled over £2.25bn (Figure 1).
The Toronto Stock Exchange Venture exchange was slightly more robust, with mining financings on this exchange totalling C$4.1bn, down 31% from C$6.0bn in 2021, which was a record high for the market (Figure 1).
Figure 1: Mining financings on junior exchanges
Source: Data compiled by MMRC
The Toronto Stock Exchange main board exchange saw mining financings of C$3.5bn, which is a relatively minor decrease in mining capital raisings of 12% compared to C$3.9bn in 2021, but a staggering 82% down from the highs of C$19.4bn in 2009 (Figure 2).
Figure 2: Mining Financings on the TSX Exchanges
Source: Data compiled by MMRC
The decline in mining financings was matched by a decline in the volumes of mining equities traded, across the junior exchanges.
During 2022, the AIM market experienced a 30% decline in the value of mining shares traded to £6.3bn compared to £9.1bn in 2021.
The TSX venture exchange experienced a 47% decline in the value of mining shares traded, down to C$10.1bn from C$18.9bn in 2021.
Figure 3: Mining Share Volume Values Traded on the Junior Exchanges
Source: Data compiled by MMRC
The TSX main board exchange actually experienced an increase in the value of shares traded of 17% totalling C$301.1bn in 2022 compared to C$256.9bn in 2021 (Figure 4).
Figure 4: Mining Share Volume Values Traded on the Senior Exchanges
Source: Data compiled by MMRC
Looking ahead to 2023, inflation is likely to continue to apply downward pressure to the mining sector and wider markets in general.
Optimism regarding a reduction in interest rate hikes is likely misplaced and the November-December rally in markets appears a bear market really with economic conditions likely to get worse before they get better.