46 new DR programs established; BNY Mellon ADR Index up 1.86% through June; Mexico and Chile country DR indices post double-digit gains
NEW YORK, July 31, 2012 — In spite of a volatile first six months of 2012, the major Depositary Receipt (DR) market metrics were essentially flat or only slightly lower, according to BNY Mellon's Depositary Receipts Midyear Market Review. While overall DR trading volume and values were down year-over-year, partly affected by global economic turbulence, the BNY Mellon ADR Index posted a 1.86% year-to-date gain. In total, there are now more than 3,500 sponsored and unsponsored DR programs available to the world's investors, up from 3,413 a year ago.
From January through June, 79.5 billion DRs valued at $1.49 trillion traded on the world's markets and exchanges, 46 new sponsored programs were created, and $1.25 billion was raised through 11 DR initial public offerings and follow-on transactions. For the same period last year, 80.5 billion DRs valued at $1.91 trillion were traded. DR capital raisings and sponsored program establishment also were down year-over-year.
"The first half of 2012 clearly was marked by global uncertainty, but portfolio diversification through DRs has offered a viable option to many investors," said Michael Cole-Fontayn, CEO of BNY Mellon's Depositary Receipts business. "Many DR country and sector indices showed strong gains in the first half of the year and more than 40 new programs were established, showing the resilience of the DR market and that investors are actively using depositary receipts as an efficient way to access global equities."
According to the report, Oil & Gas sector issuers led all industries with 14.7 billion DRs traded, valued at $328 billion. The two sectors with the largest percentage returns through June were Beverages and Diversified Telecommunications, up 40% and 4%, respectively. The two lowest performing sectors were Semiconductor and Communications Equipment, down 49% and 52%, respectively.
In terms of DR trading volume, Construction Materials and Diversified Telecommunication led the way, increasing 26% and 25%, respectively, year-over-year. The Semiconductor and Pharmaceutical sectors were down the most, 37% and 21%, respectively. Most active sectors as measured by new sponsored DR programs in 2012 were Oil & Gas with six, followed by Metals & Mining and Banks, which both added five.2
Unsponsored DR Market
The unsponsored DR market continued to grow, adding 114 new programs in the first half of 2012. There are now were nearly 1,300 unsponsored DR programs available to investors around the globe. Notable issuers that converted their unsponsored DR programs to sponsored status included Japan's Toppan Printing, South Africa's Mr Price, and the UK's Severn Trent.
BNY Mellon ADR IndexSM Performance3
During the first half of 2012, overall ADR performance, as tracked by the BNY Mellon ADR Index, was positive. On June 29, the ADR Index closed at 171.46, with total return of 1.86% year-to-date. Year-over-year, the ADR Index was down 13.74%.
The best performing DR country indices for the six-month period were the BNY Mellon Mexico ADR Index, which was up 17.96%, followed by the BNY Mellon Chile ADR Index, up 10.14%, and the BNY Mellon Japan ADR Index, up 9.45%. In total, 19 out of 34 DR country indices posted positive returns for the first half of the year.
China's Tudou Holdings was the best-performing ADR Index constituent year-to-date, returning 205.28%. Other top-performing ADR Index constituents included China Sunergy, up 118.52%, and KongZhong, up 94.20%.
DRs continued to grow as an investment vehicle through their use in Exchange-Traded Products. In April, the Royal Bank of Scotland launched the new RBS China Trendpilot™ Exchange-Traded Note utilizing the BNY Mellon China Select ADR Total Return Index.
BNY Mellon's DR Leadership
BNY Mellon acted as depositary for 58% of all new sponsored DR programs, 91% of DR capital-raising transactions, and 79% of all DR capital-raising value through midyear. BNY Mellon continued to innovate, having managed a complex transaction with Brazil's BTG Pactual and worked closely with Egypt's Orascom Telecom to de-merge a new entity. In addition, three companies – including the second most-actively traded DR program, Brazil's Petrobras, as well as Italy's Eni and Taiwan's Himax – moved their sponsored DR programs to BNY Mellon in the first half of the year.
To access the full 2012 Midyear Market report, visit www.bnymellon.com/dr.
BNY Mellon acts as depositary for more than 2,500 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 financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $27.1 trillion in assets under custody and administration and $1.3 trillion in assets under management, services $11.5 trillion in outstanding debt, and processes global payments averaging $1.4 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Learn more at www.bnymellon.com or follow us on Twitter@BNYMellon.