The Canadian stock market has had a pretty good two years after being “dead money.” It was a very poor investment for a couple of decades. But, in my opinion, this has been driven by the financial sector, a paper shuffle. And then there is the real estate sector. Another paper shuffle. But you need to dig a little deeper.
As of early 2026, the financial sector, dominated by Canada’s “Big Six” banks, accounts for approximately 33%-33.2% of the S&P/TSX Composite Index’s market capitalization.
Bank Domination: The “Big Five” (RBC, TD, BMO, Scotiabank, CIBC), along with National Bank, command 86.3% of the Canadian banking sector’s market share, making them the primary drivers of this percentage.
Key Data Points for 2026:
Top Constituents: Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) consistently rank as the top two largest companies by market cap on the entire TSX.
While the financial sector is the largest, it is closely followed by energy and materials, with banks serving as the primary anchor for the Canadian market’s high concentration in financials
Services, including the massive real estate sector, constitute over 70% of Canada’s GDP. Real estate, rental, and leasing specifically represents a major portion, often cited at around 13% to 14% of the national GDP, acting as the largest single industrial contributor to the Canadian economy.
Key details regarding the services and real estate sector:
Total Services Sector: The broader services sector, which includes professional services, healthcare, finance, and real estate, accounts for roughly 70% of GDP.
Real Estate Focus: The “real estate, rental, and leasing” industry is the largest contributor to Canada’s GDP, accounting for 13.2%.
Provincial Dependence: Some provinces are highly reliant on real estate, with British Columbia experiencing up to 1 in 5 GDP dollars (19.6%) generated by the sector.
Broad Definition: The real estate sector’s high percentage includes the “imputed” rent of owner-occupied homes, not just commissions and leasing fees.
Underground Activity: Real estate and related financial services are also key players in the underground economy, representing 15.3% of that activity.
This is indicative of the fact that Canada has no real economy. If you add in a few tech companies and a couple of pipelines, there’s not much out there for a long-term investor. And then there is the real estate sector, which adds no real wealth; it’s just playing with yourself to create fake value.
This would also explain the growing income inequality and the loss of productivity (failure to invest in anything except paper assets). Over the last decade (roughly 2015–2025), Canada has experienced a significant, structural slowdown in business investment in capital assets, leading to a widening productivity gap with the U.S. While non-residential capital stock grew by only 10.9% in real terms over the decade, investment per worker has stagnated or declined, particularly in machinery, equipment, and non-residential structures.
In my opinion, this is the explanation for the rather anemic performance of the Canadian stock market in decades gone by. It likely does not bode well for the future. What will happen to Canada? I don’t know, but I wish I had acted on this a long-time ago. Poor retirement planning on my part, and not enough due diligence.
Will an investment advisor help here? I’m not sure. There are no easy answers. But can you really rely on someone who has a superficial knowledge of these matters to guide you long-term? To have an understanding of what’s going on in the long-term? I think not. You need to do a lot of due diligence to find someone to be your investment advisor.
