Equity issuance remained strong, but trading was weak, in the second quarter, according to the latest data from the Investment Dealers Association.

The IDA said Thursday that total equity issuance rose 14% from the first quarter to $11.65 billion — the third highest quarterly total on record, and 24% ahead of the same period a year ago. “Though the strong momentum in new issues and trading that was building in equity markets last year has been less evident thus far in 2004, Canada’s equity markets are still showing signs of good health,” the IDA said in its report.

There was notable strength in initial public offerings and limited partnerships, but income trusts were flat. Resource companies were the biggest contributor on a sector basis, accounting for almost half of the overall financing action. Strong commodity prices have helped support action in these firms.

Common equity IPOs raised $1.3 billion in the quarter, which is up 70% from Q1, and this marks the highest level of IPO action since Q1 2000. OPTI Canada’s $301-million debut was the quarter’s biggest deal.

However, common equity issuance overall was more or less flat at $5.2 billion. Volume of common equity deals was down 25% quarter over quarter.

Preferred share issuance was strong, adding $1.3 billion in new financing. CIBC had two offerings during the quarter, worth a combined $463 million. These deals represented about 35% of the total preferred share financings.

The LP product was also very popular in Q2, raising a record $964 million, well ahead of the previous record of $565 million set in Q3 2003. The IDA says that this was driven by “both a hot resources sector and increased investor appetite for tax-efficient flow-through shares”.

The income trust sector was about flat, with financings of $4.15 billion. Income trust IPO action slipped for the third straight quarter. Still, this leaves the group 30% ahead of the same quarter last year. Yellow Pages Income Fund had the largest issuance, with a single deal valued at $743 million.

Private placement issuance was down 50% from the previous quarter, although this still leaves it 50% than Q2 2003.

Despite the strength in financings, trading volume slumped 28%, ending a strong of six consecutive quarterly gains. Nevertheless, volume is still up 16% from Q2 2003. The number of transactions on the TSX is up 32% from the same quarter last year but down 18% from Q1 2004. The number of transactions on the TSX Venture exchange is up 79% from the same quarter last year but down 41% from Q1 2004.