(Bloomberg) — Shopify Inc. is a growing rival to Amazon.com Inc. in e-commerce. The Canadian tech company is still much smaller than the U.S. giant, of course — except in one respect.
One reason Shopify stands out, of course, is there are no other Canadian tech companies even close to its size: it closed the week with a market value of C$165 billion ($123 billion). As investors pile into the tech sector globally — and as more retailers turn to online selling to serve customers during the pandemic — Shopify’s popularity keeps growing. The stock is an easy choice for managers of Canadian large-cap funds who want some local exposure to e-commerce.
The three largest sectors in the TSX index — financials, energy and materials — have a combined 55% weighting, with 99 of the index’s 221 members.
The index has only 10 tech companies. Yet, they now represent 10.5% of the TSX composite, and that percentage has almost doubled this year. For Shopify, its influence has tripled since the end of 2019.
Shopify’s stellar earnings report this week provided fresh evidence of how the stock can push around the broader index. After reporting second-quarter sales that nearly doubled, crushing analysts’ estimates, the stock jumped 6.8%.
On that day the TSX rose 173 points. Shopify alone contributed 71 points of the gain, data compiled by Bloomberg show.
Read more: Big Tech Earnings Surge During Pandemic While the Economy Slumps
Here’s what happened this week.
Just the Numbers
Canada’s economy has made up almost half of its historic contraction since the worst days of the pandemic, Statistics Canada reported Friday. Gross domestic product expanded 4.5% in May versus April. June was even stronger, with the statistics agency reporting a flash estimate of another 5% increase. Cumulatively, GDP has increased about 10% in the two months, after falling more than 18% in March and April.
The Canadian government’s efforts to prevent the economy from collapsing have resulted in more red ink in just two months than in any full year in the country’s history. The shortfall for April and May hit C$87 billion, according to finance department figures released Friday.
Prime Minister Justin Trudeau denied allegations his ties to the WE Charity led the government to award a contract to the organization. In 90 minutes of testimony to a parliamentary committee, he said he never influenced the public service’s decision to choose WE to administer a C$900 million student-grant program this spring, even though he realized in hindsight he should have recused himself from cabinet’s final decision on the matter.
Trudeau unveiled a plan to wind down Ottawa’s flagship Covid-19 income support benefit and bring recipients into an expanded employment insurance system. The Canadian Emergency Response Benefit will be phased out as the first people to receive the C$2,000 monthly payments start losing eligibility at the end of August.
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