Five blessings from Bay Street's bull run

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Bay Street is buzzing with deal flow, and that's created some broad market benefits that are easy to overlook. Below are five blessings from the current bull run:

Non-resource companies finally get some love

In normal markets, materials and energy companies comprise roughly half the S&P/TSX Composite Index. But in these unusual times, spurred by the recent rout in commodity prices, many investors have rotated into sectors such as consumer staples. While there remains a flurry of energy financings – Crescent Point just raised $600-million to finance its acquisition of Legacy Oil + Gas – everything from retail companies to technology startups are getting some love. Such demand allowed Wajax Corp., an industrial parts and service company, to raise $65-million on Tuesday.

Future TSX stalwarts get the growth capital they need

If resource prices stay suppressed for a long time, Canada will need some new corporate titans to emerge. It's far too early to tell who they will be, but those on the cusp of building big businesses, such as Element Financial Corp. and DH Corp., both of which operate in niche areas of financial services, have been able to raise money and fund the acquisitions that help them grow.

We're replenishing the TSX with new names

Giant takeovers, such as Loblaw Companies Ltd.'s deal for Shoppers Drug Mart and 3G Capital's acquisition of Tim Hortons Inc., grab headlines when they're announced, but they eventually create a hole because fewer Canadian companies are available as investments. That's why it's refreshing to see the potential for so many initial public offerings. Cara Operations Ltd.'s IPO earlier this year, for instance, partly replaces the void created by the purchase of Tim Hortons. (However, the parent company that bought Tim Hortons, Restaurant Brands International, is now also traded in Canada.)

Private backers get a chance to exit their investments

A few years ago, there was a minor freak out across Canada stemming from the dearth of venture capital support. The worry: If we don't fund startups, it'll be impossible to create the next generation of great domestic companies. There was such panic that the federal government even stepped in and ponied up some venture funds. Now that more early stage support exists, backers must be given some hope to exit their investments – either through IPOs or sales. (The same goes for private equity funds that are looking to cash out.) The hot market offers such hope, proving that an exit strategy is possible.

Capital markets' earnings support bank bottom lines

No one knows where retail profits are heading for Big Six banks – loan growth is slowing, net interest margins are still weak – so the surge in deal flow offers some buffer as executives navigate the choppy waters.