Amidst an economic slowdown in the US, a new study reveals a global decrease in ADR new issuance but positive long-term increase in non-US equities trading.
In a report published by Citibank Depositary Receipt Services, global ADR new issuance for the first half of year 2001 is down and the trading volume has dropped to last yearÆs record levels. Of the top 25 ADRs this year, only three were Asian company: Taiwan Semiconductor Manufacturing Company and United Microelectronics Corporation (UMC), both from Taiwan; and Asia Pulp and Paper from Singapore.
Nevertheless, the study indicates a steady increase of 34% in self-directed investments by individual US investors in non-US equities. Seven Asian companies dominated the top 10 capital raisings under ADRs: Hynix Semiconductor Inc. (formerly Hyundai Electronic Inc.) from Korea, CNOOC Limited from Hong Kong, Surplus Technology and Compal Electronics from Taiwan, Satyam Computer Services Limited and Dr. ReddyÆs Laboratories from India, and NTT Mobile Communications ("DoCoMo") from Japan.
So far this year, the largest and most significant capital raisings highlighted by the report is the $1.25 billion offering of Hynix Semiconductor. Capital raised by non-US companies amounted to $3.8 billion, compared to $16.5 billion in the first half last year. Citibank asserts that this decrease is consistent with the current overall capital market activity.
"ItÆs no surprise that the ADR market has been impacted by cautious investor sentiment when virtually all global capital market activity has been negatively influenced thus far this year," said Kurt Schneiber, global managing director of Citibank Depositary Receipt Services. "However, we remain bullish on the long-term, highest quality companies, regardless of geographic origin."