JP Morgan’s latest annual report, the Asia Pacific Year in Review 2010 reveals a positive outlook for the Asia Pacific DR market, following a strong 2010 compared with 2009 and despite a challenging 12 months that saw ongoing headwinds from Europes sovereign debt concerns, policy tightening in emerging markets and uncertainty around the withdrawal of monetary stimuli and mixed economic data from a number of key markets.
With the continued recovery of capital markets globally and an improvement in corporate earnings generally, were expecting 2011 to deliver another strong year of growth in the Asia Pacific depositary receipts space,” says Kenneth Tse, Asia-Pacific Head of J.P. Morgans depositary receipts group. “China and India will undoubtedly remain key players, but were also expecting to see some of the smaller markets like Mongolia and Vietnam begin to assert themselves on the global stage over the next 12 to 24 months.
The annual report, which includes analysis of DR trends over the past 12 months along with an outlook on the coming year, highlighted a number of key areas in which activity was expected to rise. These included Hong Kongs HDR market as a destination for global companies seeking to tap Asias growth story; the further development of emerging markets within Asia Pacific in terms of capital raising activities, and an increase in the number of issuers from China and Singapore seeking to list DRs on the Taiwan Stock Exchange.
JP Morgan also see some of the smaller, localised Asian markets becoming integral players to growth in DR capital raising.
We think that local market DRs will continue to evolve quickly, and it is a segment that offers significant growth opportunities going forward,” says Tse. “Local market DRs offer companies with significant operations in Asia Pacific better access to a growing base of investors within each market investors who are seeking local currency denominated investment vehicles and exposure to a wider range of international names. Following our role as Vales depositary bank for their landmark HDR listing in December 2010, we expect that Hong Kongs HDR market will make further strides this year in terms of its further development.