DR trading volume up over 10% in first quarter
NEW YORK, April 23, 2013 — Prices of depositary receipts (DRs) for Asian technology companies led gains in the first quarter as DR trading rose more than 10% over the end of 2012, according to the BNY Mellon Classic ADR IndexSM Series. Their appreciation was helped by surging U.S. equity markets in the period, which reached levels not seen since before the financial crisis.
Taiwan's Himax Technologies and Inotera Memories saw the price of their DRs more than double during the first three months of the year, with China's WSP, Vipshop and Camelot Information Systems seeing increases by more than half — driven by U.S. markets. But the biggest price gain was that of U.K. travel agent Thomas Cook, which saw its local stock rise too, following restructuring initiatives by the company.
"Investors still seem to favor stalwart sectors like technology, oil and gas, as well as banking when purchasing depositary receipts for their portfolios,"(1) said Christopher M. Kearns, CEO of BNY Mellon's Depositary Receipts business. "There are now more than 3,700 DR programs available to the world's investors, compared with 3,500 a year ago."
DRs typically represent non-U.S. ordinary shares and trade on traditional and over-the-counter (OTC) markets and stock exchanges.
Meanwhile, the top-performing BNY Mellon country indices consisting of DRs from companies in the Philippines and Indonesia ranked ahead of those from Ireland, Belgium, Sweden and Switzerland – in contrast with the trend in 2012, when returns on indices for Western European countries such as Germany, France and Switzerland performed better.
"Returns on our Asia-Pacific indices were solid this past quarter," said Kearns. "Western Europe remains the largest and deepest DR market in the world with 11 billion DRs totaling $210 billion traded in the first quarter."(2)
As the only real-time index to track all American Depositary Receipts (ADR), New York shares and global registered shares traded on the NYSE, NASDAQ and over-the-counter, the BNY Mellon Classic ADR Index has become an established international benchmark.
In Europe, BNY Mellon established over-the-counter DR programs for German luxury clothes maker Hugo Boss, Spanish mobile telecoms service group Let's Gowex, Austrian postal service Osterreichische Post, and was reappointed by Bayer, Fresenius Medical Care and Syngenta. BNY Mellon also acted as depositary for French semiconductor maker Sequans Communications on a secondary offering on the NYSE. Meanwhile, Russian companies continued to be the most-actively traded DRs on the International Order Book (IOB), according to London Stock Exchange data.
In the Middle East and Africa, BNY Mellon acted as tender and exchange agent and depositary bank for newly established OCI N.V., a subsidiary of Orascom Construction Industries of Egypt, when it launched a tender for all outstanding DRs of its parent and became the first Egyptian company to list on the NYSE Euronext in Amsterdam. In South Africa, BNY Mellon established an OTC DR program for Blue Label Telecoms, as well as a listing on the NYSE for Sibanye Gold, a company formed by the spin-off of mines by Gold Fields.
In India, BNY Mellon met with the Ministry of Finance, markets regulator SEBI, and the Reserve Bank of India to present a white paper, India: Easing Conditions for Investors, suggesting that to remain one of the world's top investment destinations the nation should review its depositary receipt regulations and consider introducing OTC non-capital-raising ADR programs for Indian companies.
First Quarter Highlights include:
- The BNY Mellon Classic ADR IndexSM Series, which tracks the performance of depositary receipts by country of origin, showed the Philippines leading with price gains of 20%, followed by Indonesia (+18%), Ireland (+13%), and Belgium (+12%), while the indices for Australia and Mexico gained 8% and 4%, respectively.
- The most active sectors were Technology with 6.4 billion DRs traded, valued at $56 billion, followed by 5.6 billion Bank DRs, at $76 billion, Oil and Gas issuers with just over 5 billion DRs traded, valued at $104 billion, 3.4 billion Metals & Mining DRs at $52 billion, followed by Mobile Telecoms issuers trading 2.3 billion DRs totaling $50 billion.
- Globally, there were 35 billion DRs valued at $630 billion traded, representing increases of 12% and 14%, respectively, compared with the previous quarter.
- Western Europe saw more than 12 billion DRs traded valued at $246 billion, followed by Latin America where there were 9 billion traded in the first quarter with a total of $159 billion, Asia Pacific had 6.6 billion DRs worth $140 billion change hands, Eastern Europe saw 5.6 billion DRs bought and sold in transactions totaling $63 billion and the Middle East and Africa, where just over a billion DRs traded totaling $21 billion.
- The top 10 DRs in terms of price performance include a 145% leap by the U.K.'s Thomas Cook, followed by Taiwan's Himax Technologies (+126%), and then Taiwan's Inotera Memories (112%), Edap of France (+104%), Australia's Linc Energy (95%), Mexico's Corporacion Durango (+93%), Australia's Novogen (+90%), as well as China's WSP Holdings (+88%), Vipshop and Camelot Information Systems, both gaining 70%.
- The most actively traded DRs in the U.S. by value included China's Baidu, Brazil's Vale and Petrobras, the U.K.'s BP and Vodafone, Russia's Gazprom and Sberbank, Finland's Nokia, and Mexico's America Movil and Cemex.
- Russia dominated the top 10 most-actively traded depositary receipts on London's IOB with Egypt's Orascom Telecom being the only non-Russian company that traded enough volume to make the list. The running order was Sberbank, VTB Bank, Lukoil, Uralkali, Orascom Telecom, Severstal, Mail.ru, OJSC Magnit, MegaFon and GlobalTrans Investment.
To view BNY Mellon's Q1 DR market update, visit http://www.bnymellon.com/depositaryreceipts/update/2013q1.pdf
BNY Mellon acts as depositary for more than 2,700 American and global depositary receipt programs, acting in partnership with leading companies from 68 countries. BNY Mellon is committed to helping securities issuers access the world's rapidly evolving financial markets and delivers a comprehensive suite of depositary receipt services. Learn more at www.bnymellon.com/dr.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of March 31, 2013, BNY Mellon had $26.3 trillion in assets under custody and/or administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Learn more at bnymellon.com, or follow us on Twitter @BNYMellon
(1) See attached charts, Most-Active Sectors by Volume, Bloomberg data as of March 31, 2013.
(2) Bloomberg data, as of March 31, 2013.
This release is for informational purposes only. BNY Mellon provides no advice nor recommendation or endorsement with respect to any company or securities. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities. Depositary Receipts: Not FDIC, State or Federal Agency Insured; May Lose Value; No Bank, State or Federal Agency Guarantee. BNY Mellon provides no advice nor recommendations or endorsement with respect to any company, security or products based on any index licensed by BNY Mellon, and we make no representation regarding the advisability of investing in the same.