ADR cross border capital flows grew by 88% last year compared to 1999, according to a Citibank study that reports a record increase for the market. The surge in volumes, according to the report, was due primarily to dramatic market fluctuations caused by the global technology slump and a slowing US economy.
ADR trading volume surged 79% over 1999 to a record of 30 billion shares, far exceeding the 45% growth rate of the entire US market excluding ADRs, which rose to 660 billion shares. ADR trading value reached an all time high of $1.1 trillion in 2000, up 64% from 1999.
Asia among leaders of ADR capital raisings
During 2000, four of the top 10 capital raisings using ADRs were issued by Asian companies (see table below). Overall, capital raised by non-US companies using depositary receipts hit a record $30 billion, an increase of 38% from 1999 and 211% from 1998. The largest percentage gains came from Latin American, 1256% to $6.3 billion, followed by Developed Asia (Japan, Hong Kong, Singapore, Australia and New Zealand), 108% to $3.6 billion.
Capital raised | |||
| Issuer Name | Country | Depositary | $US |
| China Unicom Limited | Hong Kong | BoNY | 2060.1 |
| Petroleo Brasileiro S.A. - Petrobras | Brazil | Citibank | 2047.7 |
| Telefonos de Mexico S.A. de C.V. | Mexico | Morgan | 1692.1 |
| Serono S.A. | Switzerland | BoNY | 1476.2 |
| Deutsche Telekom AG | Germany | Citibank | 1415.9 |
| United Microelectronics Corporation (UMC) | Taiwan | Citibank | 1291.5 |
| China Mobile (Hong Kong) Limited | China | BoNY | 1230.8 |
| Taiwan Semiconductor Manufacturing Company Ltd | Taiwan | Citibank | 1167.9 |
| Grapo Televisa, S.A. de C.A. | Mexico | Citibank | 1115.7 |
| Royal Bank of Scotland | UK | BoNY | 1000.0 |
ADRs held in mutual funds at record high
The study also showed that ADRs as a percentage of total global (excluding the US and Canada) and international mutual fund net assets have more than doubled from 27% in 1994 to 56% as of June 2000.
Data from the US Federal Reserve shows total US investment in non-US equities reached $2 trillion, seven times the $279 billion recorded in 1991. US individual investments in non-US equities, either directly or through brokerage accounts or mutual funds, came to an estimated 52% of total equity investment ($1.04 trillion) in 2000, up from an estimated 17% in 1991. According to the report, this figure is expected to exceed 56% by 2003.
ADR quarterly cross-border inflows and outflows
Citibank's study tracks ADR investor response to US economic factors, including a lagged response to the aggressive credit tightening begun by the Fed in June 1999. The study indicates a transition from ADR outflows to inflows, a trend they predict will continue through the second quarter of 2001.
1999 | 2000 | 2001 Forecast | |||||||
| Region | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q |
| Europe | 78% | 85% | -144% | -208% | 97% | + | + | - | - |
Developed Asia | 41% | 11% | 1% | 33% | -24% | - | + | + | - |
Emerging Asia | -56% | 93% | 7% | -44% | -1% | + | + | - | - |
Latin America | 18% | -13% | -8% | 79% | 2% | - | + | + | - |
Total World | 14% | 46% | -43% | -91% | 15% | + | + | - | - |
Legend: + inflows; - outflows
