Q3 DR Market Update shows Asia still dominates capital-raising activity; Investor demand continues for new emerging and frontier market programs
NEW YORK, October 17, 2013 — Capital raising by companies using depositary receipts (DR) picked up modestly in the third quarter, led by offerings from Asia-based firms and rising to more than $5.6 billion through the first nine months of the year, according to BNY Mellon's DR Market Update.
Companies coming to market ranged across sectors, from traditional industrials to alternative energy, and raised more than $2.0 billion during the quarter, up from $1.4 billion in Q2.* Fubon Financial Holding Co. led with a global depositary receipt (GDR) offering in July of $850 million. Fubon was one of three offerings from Asia in Q3, along with ReneSola and JA Solar of China, where BNY Mellon acted as depositary. Companies from the region have accounted for more than $2.6 billion, or nearly half, of the global capital raised through September.
"Third quarter activity builds on the momentum created earlier in 2013 with China's LightInTheBox IPO and Japan's UBIC capital raising," said Christopher M. Kearns, CEO of BNY Mellon's Depositary Receipts business. "We're seeing a steady uptick in the companies coming to market as well as investor appetite for those offerings, both from developed and developing countries. Depositary receipts continue to serve as the bridge for efficient cross-border investing."
Outside of Asia, discount airline Volaris staged a roughly $500 million initial public offering in the year's first dual-listing from Mexico, listing certificates of ordinary participation in Mexico and ADRs on the New York Stock Exchange. South African transport software and hardware management company MiX Telematics launched an IPO in August, listing ADRs on the NYSE and raising just over $100 million.
To meet investor demand for new emerging and frontier market stocks, BNY Mellon established 'unsponsored' DR programs in the third quarter for companies such as Zambia's Copperbelt Energy Corp. and Zambeef, and South Africa's Famous Brands and Lewis Group.
DRs typically represent non-U.S. ordinary shares and trade on traditional and over-the-counter (OTC) markets and stock exchanges.
Top Company and Country DR Index Performers*
Asia-based companies dominated the list of top-performing individual DR programs through September, several of which saw their DR price more than quadruple year-to-date, including Taiwan's Inotera Memories and Himax Technologies, or triple in value, such as China's JinkoSolar. The best overall performing DR through the first nine months was Denmark's Vestas Wind Systems, up 341%, fractions of a percentage point ahead of South Korea's Hanwha SolarOne.
Through September the top-performing BNY Mellon country index, comprising DRs from locally based companies, was Argentina (+37%), followed by Japan (+23%), according to the BNY Mellon Classic ADR IndexSM Series. Returns on indices for Western European countries, such as Switzerland, the Netherlands, France and Spain, rounded out most of the top 10. As the only real-time index to track all ADRs, New York shares, and global registered shares traded on the NYSE, NASDAQ and over-the-counter, the BNY Mellon Classic ADR Index is a widely used international benchmark.
Third Quarter Highlights*:
- The most actively traded DRs globally by value included China's Baidu, the U.K.'s Vodafone, Brazil's Vale and Petrobras, BP, Russia's Gazprom and Sberbank, Finland's Nokia, and Mexico's America Movil.
- The top 10 DRs in terms of price performance year-to-date include a 341% leap by Denmark's Vestas Wind Systems and South Korea's Hanwha SolarOne, followed by China Sunergy (323%), Taiwan's Inotera Memories (320%),Taiwan's Himax Technologies (+317%), and then China's JinkoSolar (263%) and Trina Solar (+256%), a 230% gain seen in the U.K.'s Thomas Cook, followed by China's YY Inc. (+228%) and ReneSola (+224%).
- The BNY Mellon Classic ADR IndexSM Series, which tracks the performance of depositary receipts by country of origin, showed Argentina leading with price gains of 37% year-to-date, followed by Japan (+23%), Switzerland (+20%), Netherlands (+19%), France (+18%), Spain (+16%) and Germany (+14%).
- The most active industries year-to-date were Commercial Banks with 17 billion DRs traded, valued at $194 billion, followed by 16 billion Oil, Gas & Consumable Fuels DRs valued at $289 billion, Metals & Mining issuers with just over 15 billion DRs traded worth $236 billion, 12 billion Communications Equipment DRs valued at $50 billion, followed by Semiconductor issuers trading 9 billion DRs totaling $111 billion.
- Globally, there were 108 billion DRs valued at $1.9 trillion traded, representing decreases of 3% and 7%, respectively, compared with the same period last year.
- Western Europe saw more than 35 billion DRs traded, valued at $718 billion, followed by Latin America where 30 billion DRs traded in the third quarter worth $460 billion, Asia Pacific had 23 billion DRs worth $466 billion change hands, Eastern Europe saw 17 billion DRs bought and sold in transactions totaling $172 billion, and the Middle East and Africa, where 3.7 billion DRs traded totaling $57 billion.
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 35 countries and more than 100 markets. As of Sept. 30, 2013, BNY Mellon had $27.4 trillion in assets under custody and/or administration, and $1.5 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.
*Trading and company performance data: Bloomberg as of 9/30/ 2013. Country DR Index data: BNY Mellon and S&P Dow Jones Indices as of 9/30/2013.
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.