Demand For Depository Receipts Triple, Says BNY Mellon

Investor demand for international securities has pushed capital raising in depository receipts (DRs) to reach over $38 billion globally, a three-fold increase year-on-year according to BNY Mellon.  

The levels are also the highest since the financial crisis in 2008, in which Chinese companies accounted for more than a third of the year’s capital raising transactions.

BNY Mellon’s DR business forecasts that trading volume will rise 6% in comparison to last year to 152 billion DRs by the end on 2014. An estimated $3.2 trillion of DRs are expected to be traded by the end of the year, a 25% increase.

“Investors continue to see DRs as a preferred option for portfolio diversification and cross-border investing, despite recent volatility in global stock markets,” said Christopher Kearns, CEO of BNY Mellon’s DR business.

DR levels this year were greatly boosted by new rules in Taiwan, India and Romania which permitted the issue of new types of DR programmes.

Furthermore, companies in the Asia Pacific region led with 32 DR programmes raising nearly $33 billion, with Chinese companies accounting for 24 of these programmes and raising $31.6 billion.

Firms in Europe, Middle East and Africa followed with 20 capital raising transactions amounting to $3.2 billion, while in Latin America only companies in Brazil, Chile and Columbia conducted four transactions raising $2.4 billion.