The American and global depositary receipt (DR) market will post higher levels of trading volume, trading value and total investment for 2004, according to an analysis released by The Bank of New York.
DR trading volume in 2004 will substantially exceed 2003 levels and reach an all-time high. The Bank projects that a record 39.1 billion DRs, valued at $885 billion, will have traded on the New York Stock Exchange (NYSE), the American Stock Exchange (Amex) and Nasdaq by year-end. Compared with 33.1 billion DRs, valued at more than $632 billion in 2003, this represents increases of 18.1 percent and 40.0 percent in DR trading volume and trading value, respectively. Annual DR trading volume has now increased each year since 1990, while this year’s DR trading value is second only to 2000’s record.
The total value of U.S. investment in non-U.S. equities (both DRs and non-U.S. shares) increased to $2.1 trillion as of September 30, 2004, an increase of 26 percent from the same time last year and a record high, according to the latest U.S. Federal Reserve statistics.
The total value of investment in U.S.-listed DR programs showed a similar rise, increasing to $490 billion at the end of the third quarter, a jump of 30 percent from the same time last year and an all-time high. Companies with significant DR investment include the U.K’s Vodafone at $21.4 billion, Russia’s Lukoil at $17.2 billion and the U.K’s GlaxoSmithKline at $16.3 billion.
Overall DR performance, as tracked by The Bank of New York ADR Index, has shown solid gains during 2004. On December 15, 2004, The Bank of New York’s Composite ADR Index closed at 120.0, up 12.0 percent year-to-date, and traded at levels not seen since June 2001. All three of the regional sub-indices were higher year-to-date, led by the Latin America Index which increased 28.0 percent. All 14 market, sector and select sub indices were also up, led by the Latin America Telecom Index which gained 26.2 percent. More broadly, 34 of 39 country indices were higher with Austria, Belgium, Colombia, Turkey and Venezuela all gaining more than 50 percent. More than two dozen ADR Index constituents, including The Netherlands’ Ispat International, Brazil’s AmBev, South Africa’s Naspers and Mexico’s Grupo Elektra, increased more than 75 percent year-to-date.
Industry wide, The Bank of New York projects a record 1,870 sponsored DR programs from 73 countries will be available to investors at the end of 2004. During the year, companies from 29 countries established 121 new DR programs, a 48 percent jump from last year’s 82 programs from 25 countries, but still lower than the high of 199 new programs established in 2000. Overall, non-U.S. companies and governments raised more than $8.4 billion with 46 new DR offerings during the year. This figure is 18.5 percent lower than last year’s $10.3 billion and 72 percent off the high of $30.1 billion raised in 2000.
Emerging market issuers favored European listed, over-the-counter traded and unlisted DRs, rather than U.S. listings. Emerging markets issuers from countries led by China, India and Brazil established 62 percent of all new DR programs and 96 percent of all DR capital raising transactions.