ADR Market Rebounds During First Half of 1999; Four New Capital Raisings from Korea Underscore Investor Interest in High-Quality ADRs from the Emerging Markets.NEW YORK--(BUSINESS WIRE)--June 24, 1999-- U.S. Investors Looking Overseas Benefit by Selecting Companies with ADR ADR - Astra Digital Radio Listings In its mid-year analysis of the American Depositary Receipt American Depositary Receipt (ADR) Certificates issued by a US depository bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. (ADR) market, Citibank today reported a significant rise in both trading volumes Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. and new capital raisings, indicating that U.S. investors regained their appetite for ADRs during the first half of 1999. Noting recent economic forecasts issued by Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. as well as the WEFA WEFA Wharton Econometric Forecasting Associates WEFA Weir Farm National Historic Site (US National Park Service) WEFA Water Earth Fire Air WEFA Women Economic Empowerment Association Group, Citibank credits the comeback in the ADR market to a recovery in many emerging market economies, particularly those in Asia. Overall, Citibank projects the total dollar value of ADR trading during the first six months of 1999 will post an 18 percent increase, from $272.3 billion to $320.7 billion, and total number of shares traded will rise 31 percent, from 6.7 billion to 8.8 billion. Meanwhile, the dollar value of capital raised via new ADR offerings soared 66 percent, from $4.2 billion during the first half of 1998 to $7 billion during the first half of 1999 (through 6/17/99). This $7 billion total through the first six months represents 73 percent of total capital raised via ADRs in 1998. Companies from emerging markets continued to be most active, accounting for 71 percent (or $5 billion) of capital raised through ADR offerings in the first half. During the first half of last year, emerging market issuers accounted for 48 percent of capital raised via ADRs. On a regional basis, Asia/Pacific-based companies raised $4.7 billion via ADRs, or 68 percent of the total. "Now that Asia has turned the corner, and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. appears to have stabilized, we're seeing a significant increase in cross-border trading of ADRs, driven in large part by interest in the emerging markets," said Kurt Schneiber, Citibank's Global Managing Director for Depositary Receipts depositary receipt A negotiable certificate that represents a company's publicly traded debt or equity. Depositary receipts are created when a company's shares or bonds are delivered to a depositary's custodian bank, which instructs the depositary to issue . "This supports our long-term view - good, high-quality companies, wherever they are located, will always be attractive to knowledgeable investors." Indeed, Korea Telecom's $2.5 billion offering this year set the record for the largest ADR capital raising. This is significant considering Korea's economy was among those most severely affected during Asia's dramatic economic downturn of 1997-1998. The Korea Telecom KT (formerly, Korea Telecom, Korean: 한국통신, NYSE: KT) is South Korea's top integrated wired/wireless telecommunication service provider. KT has been Korea's leader in the development of the information & communications business for the last 25 years offering broke previous records established by YPF YPF Yacimientos Petrolíferos Fiscales (Argentina) YPF Esquimalt, British Columbia, Canada (Airport Code) YPF Young Peoples Fellowship Sociedad Anonima's $2 billion offering in 1993 and Telefonos de Mexico's $1.2 billion issue in 1992. Three other major ADR capital raisings also came out of Korea during the first half. The third- largest offering so far this year was a $753 million transaction for Korea Electric Power This article is about Korean Electric Power Company. For the Japanese Electric Power Company, see Kansai Electric Power Company. Korea Electric Power (NYSE: KEP) is the only electric utility provider in South Korea. Corp. (KEPCO KEPCO Korea Electric Power Corporation KEPCO Kansai Electric Power Company, Inc. (Japan) KEPCO Kyushu Electric Power Company, Inc. (Japan) ). Shinhan Bank's $400 million offering was the fifth-largest, while Samsung Display Devices' $200 million offering was the eighth-largest ADR issue during this period. "The market welcomed a number of significant new programs from the emerging markets during the first half, including an OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). program for Thailand's PTT (1) (Postal, Telegraph & Telephone) The governmental agency responsible for combined postal, telegraph and telephone services in many European countries. (2) See push-to-talk. PTT - Post, Telephone and Telegraph administration Exploration & Production and a NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on listing for India's InfoSys Technologies, which underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the ongoing recovery in Asian emerging markets," Mr. Schneiber continued. "Another trend that should foster growth of the ADR market can be found in the BP-Amoco merger. This is a prime example of how non-U.S. companies are increasingly using DRs as acquisition currency in the U.S." Other "top-five" transactions included a $1 billion offering for the Netherlands' EQUANT E´quant n. 1. (Ptolemaic Astron.) A circle around whose circumference a planet or the center of ann epicycle was conceived to move uniformly; - called also eccentric equator ltname>. N.V., and a $404 million offering for Singapore-based Asia Pulp & Paper Company. Companies from the emerging markets in fact dominated the top-ten ADR transactions in the first six months of 1999. In addition to the Korean issues mentioned earlier, India's Videsh Sanchar Nigam This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. Ltd. raised $185 million and Estonia's Estonia Telecom completed a $169 million offering. Overall, companies from the United Kingdom had established the most new programs (11) through May, 1999, followed by Russia (9), the Ukraine (5) and Brazil, Hungary, Korea, Mexico and Thailand (3 each). Most-active industries included Telecommunications (10 companies), Energy Sources (6), Banking (5) and Chemicals and Steel (4 each). Top-Twenty ADRs Outperform Local and U.S. markets; Investors Demonstrate Preference for ADRs based on U.S. Dollar Value of Trading The twenty most actively traded ADRs - representing emerging and developed markets and accounting for 64% of U.S. dollar value of trading over the last 8 years - showed a 16.04% price appreciation from January 1 though May 31, 1999. This compares to a 14.98% increase in the DJIA DJIA See Dow Jones Industrial Averager (DJIA). , a 6.0% increase in the S&P 500, and a 4.62% increase in the local market indices of the top-twenty ADRs during the same period. Home market securities of the ADR companies increased 15.16%, evidencing the benefit of cross-border listing. Lifted by the strong performance of the U.S. market, the dollar value of ADR trading has increased 18%, year over year. In contrast, the U.S. dollar value of trading for the local markets of all non-U.S. companies rose an average of 13% (according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. April year-to-date data from FIBV FIBV Federation Internationale Des Bourses De Valeurs ). These results are even more striking on a region-by-region basis: -- In the Asia/Pacific region, the value of DR trading increased by 23%, while the overall local market liquidity decreased by 1%. -- DRs from Developed Asia rose by 23%, while the local market managed only a 9% gain (this reflects a 19% gain in Japan, which was offset by a 37% decline in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. ). -- DRs from Emerging Asia also posted a 23% gain, compared with a 12% decline in those local markets (despite impressive gains in Korea and Thailand). -- In Western and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , the Middle East and Africa, DRs jumped 42%, while these local markets gained 19%. -- Finally, in Latin America, DRs declined by 29% - however, the comparable local markets plummeted by 47%, a difference of 18%. This indicates that for investors, the higher-performing U.S. market was able to mitigate somewhat the damage suffered when the Brazilian real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. was devalued de·val·ue also de·val·u·ate v. de·val·ued also de·valu·at·ed, de·val·u·ing also de·val·u·at·ing, de·val·ues also de·val·u·ates v.tr. 1. To lessen or cancel the value of. in January. "For investors seeking international diversification International diversification The attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns. , liquid ADRs tend to outperform the local markets," explained Mr. Schneiber. "And for companies around the world, ADRs offer an opportunity to achieve higher valuations through the uplift effect of cross-border investment." Citibank began offering depositary receipt services to clients in 1928, and today is a market leader in this area through its Citibank Worldwide Securities Services division. With a local presence in more than 100 countries and territories, and unsurpassed strength in delivering information, Citibank is uniquely qualified to connect issuers with investors in today's global marketplace. Citibank Worldwide Securities Services offers corporate and institutional clients the full spectrum of custody, trust and safekeeping Safekeeping The storage of assets or other items of value in a protected area. Notes: Individuals may use self-directed methods of safekeeping or the services of a bank or brokerage firm. services on a global basis. Citibank is a subsidiary of Citigroup (NYSE NYSE See: New York Stock Exchange :C), the world's most global financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. organization. -0-
Most Active ADR Programs
(Based on No. of Shares Traded, Projected through June, 1999)
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LM Ericsson Telephone Co. Sweden 711,238,500
Royal Dutch Petroleum Company N.V Netherlands 315,771,750
BP Amoco plc U.K. 306,150,750
Telebras Holding Company
Depositary Receipts Brazil 274,311,900
Nokia Corporation Finland 248,163,000
ASM Lithography Holding, N.V Netherlands 187,785,000
Saville Systems plc Ireland 185,649,000
Telefonos de Mexico S.A. de C.V Mexico 184,304,250
YPF Sociedad Anonima Argentina 177,020,400
Elan Corp plc Ireland 136,817,100
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Most Active ADR Programs
(Based on $ Value of Shares Traded, Projected through June, 1999)
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Nokia Corporation Finland $31.76 billion
BP Amoco plc U.K. $28.79 billion
Telebras Holding Company
Depositary Receipts Brazil $20.05 billion
LM Ericsson Telephone Co Sweden $17.52 billion
Vodafone Group plc U.K. $16.08 billion
Royal Dutch Petroleum Company N.V Netherlands $15.42 billion
Telefonos de Mexico S.A. de C.V Mexico $10.75 billion
Elan Corp plc Ireland $9.43 billion
ASM Lithography Holding, N.V Netherlands $8.13 billion
Unilever N.V Netherlands $7.00 billion
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Top 10 Capital Raisings From Emerging Markets (Through June 17, 1999)
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Korea Telecom Corp. Korea $2.5 billion
Korea Electric Power Corporation (KEPCO) Korea $753.6 million
Shinhan Bank Korea $400.0 million
Samsung Display Devices Co. Ltd. Korea $200.0 million
Videsh Sanchar Nigam Ltd. (VSNL) India $185.0 million
Estonian Telecom Estonia $168.8 million
Windbond Electronics Corporation Taiwan $167.2 million
Magyar Tavkozlesi Rt (MATAV Rt) Hungary $140.9 million
Antenna TV Greece $115.5 million
First Philippine Holdings Corporation Philippines $71.8 million
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Top 9 Capital Raisings From Developed Markets (Through June 17, 1999)
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EQUANT N.V Netherlands $1.0 billion
Asia Pulp & Paper Company Singapore $403.8 million
Royal Bank of Scotland U.K. $300.0 million
United Pan-Europe Communications N.V Netherlands $214.9 million
Topjobs.net plc U.K. $39.6 million
Ducati Motor Holding S.p.A Italy $31.0 million
Primacom AG Germany $16.7 million
Ixos Software Germany $12.9 million
Sol Melia Spain $0.3 million
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Top 10 Countries
(Based on No. of New Companies Issuing ADRs May YTD)
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Rank Country No. of issues
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1 United Kingdom 11
2 Russia 9
3 Ukraine 5
4(tie) Brazil 3
Hungary 3
Mexico 3
Korea 3
Thailand 3
9(tie) Chile 2
Germany 2
Philippines 2
South Africa 2
Spain 2
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New ADR Programs by Region
(Based on No. of New Companies Issuing ADRs May YTD)
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Region No. of issues
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Western Europe 22
Central & Eastern Europe 21
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Total Europe: 43
Emerging Asia 10
Developed Asia 3
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Total Asia/Pacific: 13
Latin America 9
African Continent 3
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World Total 68
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