Depositary Receipts are playing an increasingly important role in global financial markets, allowing companies and investors around the globe to connect seamlessly across borders. The DR market strengthened in 2014.
Message from the CEO
Dear Clients and Friends,
The strong performance of many markets in 2014, including a 12% gain for the S&P 500, a 19.8% gain on the Shanghai SE Composite, and a 31.3% return on the CNX Nifty conceals a volatile year.¹ Contributing factors such as investor anticipation of the end of the U.S. Federal Reserve’s quantitative easing, combined with macro-economic weakness and geopolitical instability, meant that many markets touched year-lows as recently as October.
Despite this imperfect backdrop, the Depositary Receipt (DR) market strengthened in 2014:
Issuers raised over $38 billion in 2014—three times more than in 2013, and a post-crisis record.² On-line retailer Alibaba’s $25 billion initial public offering—the largest ever—led a wave of the Chinese deals that accounted for one-third of the year’s capital raisings.
Robust demand prompted the creation of 166 DR programs for issuers from 37 countries.² Landmarks in DR expansion included the first American Depositary Receipt (ADR) by a Namibian company, and new DR rules in 2014 in India, Taiwan and Romania, which should help to open up these markets to further investment.
Secondary market activity was also vigorous. Trading volume grew 8% to 159 billion DRs, and DR trading value increased by 29% over 2013 with $3.3 trillion in DRs changing hands.2
The value of DR ownership increased by more than $53 billion (up 7%) for a total of $876 billion.3
Going into 2015, the outlook is positive, both in terms of demand and supply. BNY Mellon recently interviewed securities analysts and portfolio managers at major U.S. and European buy-side institutions, and overall, survey participants kept a positive outlook on investment in the equity markets for 2015.4
The majority expect to maintain their commitment to their current equity allocation overall this year.
More than two-thirds of participants viewed the Asia-Pacific, Latin America, and EEMEA markets positively in 2015.
BNY Mellon plays a leadership role in bringing together investors and issuers and by working with regulators to improve market efficiency and accessibility. We look forward to using our deep knowledge and proven expertise to help issuers and their investors achieve their DR goals in 2015.
Christopher Kearns | READ BIO
Chief Executive Officer, Depositary Receipts
Despite this imperfect backdrop, the Depositary Receipt (DR) market strengthened in 2014: Issuers raised over $38 billion in 2014—three times more than in 2013, and a post-crisis record.
Christopher Kearns, Chief Executive Officer, BNY Mellon Depositary Receipts
Share this quote:
2014 Depositary Receipt Highlights
Depositary Receipts are playing an increasingly important role in global financial markets, allowing companies and investors around the globe to connect seamlessly across borders.
Depositary Receipts Year-Over-Year Source: BNY Mellon and other depositary websites.
For further information please visit our DR directory
Most Active Depositary Receipt Sectors Source: Bloomberg and London Stock Exchange. Includes both sponsored and unsponsored DR programs.
Value = number of DRs traded multiplied by DR price at trade.
Volume = number of DRs traded during the period.
BNY Mellon recently surveyed securities analysts and portfolio managers, of large buy-side institutions, for their outlook on global equity markets. Below are some of the key findings.
A Bullish Outlook for 2015 A majority (64%) believe the investment appeal of the equity markets studied will either increase or stay the same over the course of the year.
Signs that Appetite for Risk May Increase in 2015 A higher number say their tolerance for risk will be higher for 2015 than those assessing 2012-2014.
Increased Enthusiasm for Equity Markets Of those expressing opinions on regions, 65% expected the investment appeal of Latin American markets to increase or stay the same in 2015, while only 35% rated them currently attractive or very attractive, and 79% said Asia-Pacific markets would increase in investment appeal or stay the same versus the 57% who viewed them as currently very attractive or attractive. Lastly, 68% had expectations that EEMEA markets would increase or maintain their investment appeal in 2015, while in 2014 only 17% considered EEMEA markets as very attractive or attractive.
Stability of Current Equity Allocations and Approach to Fundamentals A majority say their commitment to equity investments will stay the same in 2015 despite general calls to broaden allocations. An even larger majority say the “noise” around generating short-term results has no impact on their focus on fundamentals or their overall investment approach.
4 Survey by Rivel, January 2015, described in more detail on page 20. For further information, please visit http://www.adrbnymellon.com
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 Dec. 31, 2014, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.7 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). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.
This document, which may be considered advertising, is for general information and reference purposes only and is not intended to provide legal, tax, accounting, investment, financial or other professional advice on any matter, and is not to be used as such. BNY Mellon does not warrant or guarantee the accuracy or completeness of, nor undertake to update or amend the information or data contained herein. We expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon any of this information or data. We provide 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.
This document is not intended for distribution to, or use by, any person or entity in any jurisdiction in which such distribution or use would be contrary to local law or regulation. Similarly, this brochure may not be distributed or used for the purpose of offers or solicitations in any jurisdiction or in any circumstances in which such offers or solicitations are unlawful or not authorized, or where there would be, by virtue of such distribution, new or additional registration requirements. Persons into whose possession this document comes are required to inform themselves about and to observe any restrictions that apply to the distribution of this document in their jurisdiction. The information contained in this document is for use by wholesale clients only and is not to be relied upon by retail clients. If distributed in the U.K. or EMEA, this document may be a financial promotion and is for distribution only to persons to whom it may be communicated without breach of applicable law.
Depositary Receipts: NOT FDIC, STATE OR FEDERAL AGENCY INSURED MAY LOSE VALUE NO BANK,