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Canada’s junior stock exchange continues to plumb new depths that would have seemed unimaginable even a few years ago.

The S&P/TSX Venture Composite Index sunk below 500 points for the first time on Monday, hitting a record low of 495.14 before closing at 496.18. To put it in context, the Venture is down 29 per cent since the start of the year, and a staggering 85 per cent since its peak in 2007.

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What may be most distressing is the way it has dropped. Since mid-2011, the index has been in a slow and relentless downward trend as investors have gradually capitulated and moved their money elsewhere. There was never any sign that a recovery was imminent. By comparison, the index fell much harder and faster during the financial crisis in 2008, but it bounced back rapidly the following year.

The problem is that the index is weighted down by the zombies

The awful performance of the Venture index illustrates just how hopeless market conditions have become for small-cap resource companies. Most of these firms are unable to raise capital due to plunging commodity prices and an overall lack of investor interest in speculative stocks. The weakest ones are struggling just to keep the lights on and pay their listing fees. More than 70 per cent of stocks on the Venture exchange are mining and energy plays and they account for 60 per cent of the weighting of the index.