Citibank Analysis Shows Capital Raised Using ADRs Reaches All-Time Record During First Half of 2000.Business Editors NEW YORK--(BUSINESS WIRE)--June 29, 2000 Capital raised using 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 increases 123% over first half of 2000 to $16.5 billion; ADR ADR - Astra Digital Radio trading value and split-adjusted share 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. surge Individual investor emerging as significant influence in cross-border investing; Non-U.S. companies targeting individual investors with innovative new programs Analysis shows fund mangers treat ADRs as a "buy-and-hold" investment while ordinary share flows behave like "hot money" 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 significant increases in capital raising using ADRs and in ADR trading volumes. While the institutional segment remains a powerful market driver of trading volume and value, Citibank analysis shows that individual investors are a growing influence in cross-border investing. Citibank estimates that individuals hold 52% of U.S. investment in foreign equities, either directly, in brokerage accounts Brokerage Account An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. or in mutual funds. The analysis shows that individual investors, with access to more market information than ever before, increasingly look to non-U.S. companies to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. their portfolios. During the first half of 2000, capital raised by non-U.S. companies using depositary receipts was $16.5 billion, up 123% from the $7.4 billion during the first half of 1999, a year in which an all time record $21.6 billion was raised. This year's most significant capital raisings include: the $2.1 billion privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of China Unicom China Unicom, full name China United Telecommunications Corporation, 中国联通, HKSE: 0762 NYSE: CHU, is a telecommunication operator in the People's Republic of China. 52. , a $1.7 billion secondary offering from Telefonos de Mexico, a $1.4 billion retail offering of Deutsche Telekom Deutsche Telekom AG (ISIN: DE0005557508, FWB: DTE, NYSE: DT, LSE: DEU, TYO: 9496 ) (abbreviated DTAG) is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Germany and in the EU. ADRs, a $1.2 billion secondary offering by Taiwan Semiconductor Manufacturing Co. and a $1.1 billion secondary offering of GDRs by Grupo Televisa of Mexico. ADR trading value surged during the first half of 2000 compared to the first half of 1999. US$ value of ADR trading grew by 119% from $316 billion to a projected record $693 billion. This compares to 43% year-on-year growth for the entire U.S. market excluding ADRs from $9.0 trillion to $12.8 trillion. The higher ADR trading growth rate is attributable to the significant outperformance of non-U.S. markets vs. the U.S. market over the past 18 months. Between January 1, 1999 and June 27, 2000, the MSCI World The MSCI World is a stock market index of 'world' stocks. It is maintained by Morgan Stanley Capital International. The index includes a selection of stocks of all the developed markets in the world, as defined by MSCI. (excluding U.S.) index increased by 23.9% in US$ terms compared to 18.0% for the S&P 500 index. Growth was also fueled by triple-digit increases in the volatile technology, media, and telecommunications sectors. ADR trading volume (split-adjusted) increased by 48% year-over-year, from 11.7 billion to a projected record 17.3 billion. This is comparable to the 50% growth rate of the entire U.S. market from 225 billion to 337 billion shares. Cross-border ADR trading grew by 83% as U.S. ADR investment inflows to non-U.S. markets increased by 49% year-on-year compared to a 36% increase in investment outflows from the U.S. market. Individual Investor a Significant Influence in Cross-Border Investing ADRs as a percentage of total global (excluding U.S.) and international mutual fund net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. increased from 36% in 1996 to 53% in 1999 and is indicative of the emergence of the individual in cross-border investing. "Escalating ADR trading volumes demonstrate considerable interest from individual investors seeking to diversify their portfolios," said Kurt Schneiber, Global Managing Director, Citibank Depositary Receipts Services. "Additionally, individual investors may be an attractive target for companies because they tend to have a "buy and hold" orientation, and are more loyal." Recognizing opportunities created by the growth of the individual investor segment, a number of non-U.S. companies previously traded on the OTC market Noun 1. OTC market - a stock exchange where securities transactions are made via telephone and computer rather than on the floor of an exchange over-the-counter market or as GDRs have begun to list their programs on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. or 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 . In the first half of 2000, these companies include: BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida and SGL Carbon SGL Carbon (FWB: SGCG) is one of the world's leading manufacturers of products from carbon. The company portfolio ranges from carbon and graphite materials to carbon fibers and composites. of Germany, Novartis of Switzerland, PC Holdings (formerly Perez Companc Perez Companc could refer to
CVRD Cowichan Valley Regional District (Vacouver Island, British Columbia, Canada) CVRD Converter, Variable Resistance, to DC Voltage of Brazil, Siliconware Precision Industries of Taiwan, Votorantim Celulose e Papel S.A. (VCP VCP Verband Christlicher Pfadfinderinnen und Pfadfinder (German Scouts) VCP VMware Certified Professional VCP Voluntary Cleanup Program VCP Virtual Control Panel VCP Video Cassette Player VCP Vietnamese Communist Party ) of Brazil, and Prudential plc This article is about the British company. For the American company, see Prudential Financial. For places named after the company, see Prudential. Prudential plc (LSE: PRU, NYSE: PUK) is a United Kingdom-based financial services company. of the U.K. Additionally, companies that already have listed ADR programs are pursuing innovative channels to reach out to the individual investor. For example, Deutsche Telekom AG this month issued an additional 22 million ADSs as part of a global offering of shares by Germany's Kreditanstalt fur Wiederaufbau (KfW). Qualified retail investors Retail Investor Individual investors who buy and sell securities for their personal account, and not for another company or organization. Notes: Retail investors buy in much smaller quantities than larger institutional investors. who purchased these ADSs in the offering and hold them continuously through December 31, 2001 will be entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive one bonus ADS for every ten ADSs acquired in the retail bookbuilding period. In this instance, the ADR program is a vital tool in tapping the vast potential of the U.S. retail investor base for a major non-U.S. company. The availability of financial information via the Internet and the ability to transact An earlier e-commerce system for the Web from Open Market that included order capture and secure order fulfillment using credit cards, ecash and other payment systems. It included customer service and subscription administration capabilities as well as an integrated database for reporting online creates a convenient, appealing channel for individual investors. 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. analysts' estimates, anywhere from 5 million to 10 million people are trading stocks online. By 2003, the number is projected to be more than 20 million. With the dramatic growth of online brokerages and market information resources (1) The data and information assets of an organization, department or unit. See data administration. (2) Another name for the Information Systems (IS) or Information Technology (IT) department. See IT. , the individual investor can access information that has traditionally been the domain of investment professionals. As a result, the individual investor is becoming increasingly astute as·tute adj. Having or showing shrewdness and discernment, especially with respect to one's own concerns. See Synonyms at shrewd. [Latin ast about the benefits of diversifying their portfolios with non-U.S. securities. A diversified diversified (di·verˑ·s global portfolio may function as a hedge, reducing volatility and has historically outperformed U.S.-centric portfolios. Citibank Analysis Links Macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. Events to ADR Flows A new study released by Citibank Depositary Receipt Services analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. ADR investor reactions to macroeconomic events occurring during the full business cycle from November 1993 through May 2000. Although not evident at first glance, relative stock market performance drives and is a leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of cross-border ADR flows. The relationship is characterized by long and relatively variable lags. Periods in which the U.S. market outperformed market outperform An analyst recommendation that a stock is expected to outperform the overall market. non-U.S. markets always resulted in lagged ADR capital outflows Capital outflow is an economic term describing capital flowing out of (or leaving) a particular economy. Outflowing capital can be caused by any number of economic or political reasons but can often originate from instability in either sphere. from the U.S. market. Periods in which the non-U.S. markets outperformed the U.S. market always resulted in lagged ADR capital inflows to non-U.S. markets. These findings were consistent across regions. "Time lags between relative stock market performance and capital flows reflect the differences in investor sentiment between holders of ADRs and ordinary shares, especially following market shocks," Schneiber noted. "When non-U.S. markets collapsed after the Asian currency crisis of 1997 and the Russian ruble The ruble or rouble (Russian: рубль rublʹ, plural рубли́ rubli default and global equity crisis of 1998, ADR investors did not sell immediately. Instead, they saw the crises as buying opportunities and sold only after the markets had recovered sufficiently to avoid large losses. By contrast, ordinary shareholders sold immediately." Citibank Depositary Receipt Services leads the market in bringing quality issuers to the U.S. market and promoting ADRs as an effective capital markets tool. Citibank began offering American Depositary Receipts in 1928 and today is the market leader, widely recognized for delivering high quality, highly liquid programs to its customers. Citibank Depositary Receipt Services is a part of Citibank Worldwide Securities Services (WWSS WWSS Worldwide Satellite Systems (US DoD contract vehicle) WWSS Warfare and Warfare Support System ), a division of Citigroup's Global Corporate and Investment Bank. WWSS serves global issuers, investors and intermediaries through the industry's largest proprietary network, spanning 51 countries and territories. It currently provides securities services to more than 2,500 customers worldwide and has $4 trillion in assets under custody. WWSS is the industry's premier custodian bailee (custodian) n. a person with whom some article is left, usually pursuant to a contract (called a "contract of bailment"), who is responsible for the safe return of the article to the owner when the contract is fulfilled. of cross-border assets, top ranked global clearer and recognized leader in quality depositary receipt services, and agency and trust services. Citigroup (NYSE NYSE See: New York Stock Exchange :C), the most global financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company, provides some 100 million consumers, corporations, governments and institutions in 102 countries and territories with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage and asset management. The 1998 merger of Citigroup and Travelers Group brought together such brand names as Citibank, Travelers, Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. , Commercial Credit and Primerica under Citigroup's trademark red umbrella. Visit our Website at www.citibank.com/adr Information contained herein is a matter of record only. It should not be construed as advice or a recommendation by Citibank.
Top 20 Exchange Listed Depositary Receipts based on US$ Value of
Trading 1st Half 2000 Projected
1H2000
Projected
(US$ Bn)
US$
Sponsored Ticker Value of
Issuer Name Country Depositary Exchange Symbol Trading
----------------------------------------------------------------------
Nokia Corporation Finland Citibank NYSE NOK 103.3
LM Ericsson
Telephone Co. Sweden Citibank NASDAQ ERICY 65.9
Vodafone
AirTouch plc U.K. BoNY NYSE VOD 38.7
Telebras Holding
Company
Depositary
Receipts Brazil BoNY NYSE TBH 27.4
BP Amoco plc U.K. Morgan NYSE BPA 26.8
Telefonos
de Mexico
S.A. de C.V. Mexico Morgan NYSE TMX 24.3
Royal Dutch
Petroleum
Company N.V. Netherlands Morgan NYSE RD 17.5
Sony Corporation Japan Morgan NYSE SNE 15.9
STMicroelectronics
N.V. France BoNY NYSE STM 15.6
wKoninklijke Philips
Electronics N.V. Netherlands Citibank NYSE PHG 12.9
Telefonica S.A. Spain Citibank NYSE TEF 12.4
Alcatel S.A. France BoNY NYSE ALA 11.0
Elan Corp plc Ireland BoNY NYSE ELN 10.6
Satyam Infoway
Limited India Citibank NASDAQ SIFY 9.8
ASM Lithography
Holding, NV Netherlands Morgan NASDAQ ASML 9.7
Taiwan
Semiconductor
Manufacturing
Company Ltd. Taiwan Citibank NYSE TSM 9.1
SAP
Aktiengesellschaft Germany BoNY NYSE SAP 8.5
Grupo Televisa,
S.A. de C.A.
Mexico Citibank NYSE TV 8.1
Business
Objects S.A. France BoNY NASDAQ BOBJ 8.0
News Corporation
Limited, The Australia Citibank NYSE NWS 6.8
----------------------------------------------------------------------
Sources: Bloomberg Financial Markets, NYSE, NASDAQ Based on April 2000
YTD projected values
Top 20 Exchange Listed Depositary Receipts Based on Shares Traded
1st Half 2000 Projected
----------------------------------------------------------------------
1H2000
Projected
(Millions)
Sponsored Ticker Shares
Issuer Name Country Depositary Exchange Symbol Traded
----------------------------------------------------------------------
LM Ericsson
Telephone Co. Sweden Citibank NASDAQ ERICY 3,002.3
Nokia
Corporation Finland Citibank NYSE NOK 1,989.8
Vodafone
AirTouch plc U.K. BoNY NYSE VOD 717.0
BP Amoco plc U.K. Morgan NYSE BPA 520.1
Telefonos
de Mexico
S.A. de C.V. Mexico Morgan NYSE TMX 395.5
Royal Dutch
Petroleum
Company N.V. Netherlands Morgan NYSE RD 314.5
Koninklijke
Philips
Electronics N.V. Netherlands Citibank NYSE PHG 299.6
Elan Corp plc Ireland BoNY NYSE ELN 260.1
STMicroelectronics
N.V. France BoNY NYSE STM 253.1
Alcatel S.A. France BoNY NYSE ALA 248.7
ASM Lithography
Holding, NV Netherlands Morgan NASDAQ ASML 248.0
Telecommunicacoes
de Sao Paolo Brazil BoNY NYSE TSP 232.2
Taiwan
Semiconductor
Manufacturing
Company Ltd. Taiwan Citibank NYSE TSM 212.6
Telebras Holding
Company
Depositary
Receipts Brazil BoNY NYSE TBH 207.1
Telefonica S.A. Spain Citibank NYSE TEF 165.1
Satyam Infoway
Limited India Citibank NASDAQ SIFY 162.9
SAP
Aktiengesellschaft Germany BoNY NYSE SAP 145.9
Embratel
Participacoes S.A. Brazil BoNY NYSE EMT 134.9
Carrier1
International S.A. Switzerland Deutsche NASDAQ CONE 133.4
News Corporation
Limited, The Australia Citibank NYSE NWS 127.5
----------------------------------------------------------------------
Sources: Bloomberg Financial Markets, NYSE, NASDAQ Based on April 2000
YTD projected values
Top 20 Capital Raisings Utilizing Depositary Receipts June 2000 YTD
----------------------------------------------------------
Eff.
Issue Name Country Depositary Date Exchange
----------------------------------------------------------
China Unicom
Limited Hong Kong BoNY 6/21 NYSE
Telefonos
de Mexico
S.A. de C.V Mexico Morgan 6/23 NYSE
Deutsche
Telekom AG Germany Citibank 6/17 NYSE
Taiwan
Semiconductor
Manufacturing
Company Ltd. Taiwan Citibank 6/7 NYSE
Grupo Televisa,
S.A. de C.A. Mexico Citibank 1/19 NYSE
Royal Bank
of Scotland U.K. BoNY 2/28 NASDAQ
Petrochina
Co. Ltd. China BoNY 4/6 NYSE
Infineon
Technologies
AG Germany Morgan 3/15 NYSE
ASM
Lithography
Holding, NV Netherlands Morgan 6/21 NASDAQ
Chartered
Semiconductor
Manufacturing
Ltd. Singapore Citibank 5/9 NASDAQ
Royal Bank
of Scotland U.K. BoNY 2/29 NASDAQ
Hanaro Telecom Korea Deutsche 3/29 NASDAQ
Activcard S.A. France BoNY 3/15 NASDAQ
ST Assembly
Test Services
Ltd. (STATS) Singapore Citibank 2/8 NASDAQ
Siliconware
Precision
Industries
Co., Ltd. Taiwan Citibank 6/7 NASDAQ
Koninklijke
Ahold N.V. Netherlands BoNY 5/15 NYSE
Carrier1
International
S.A. Switzerland Deutsche 2/24 NASDAQ
Telecom
Argentina STET
- France
Telecom S.A. Argentina Morgan 5/9 NYSE
ASM
International
N.V. Netherlands Citibank 4/12 NASDAQ
Grupo Iusacell,
S.A. de C.V. Mexico BoNY 4/13 NYSE
----------------------------------------------------------
-----------------------------------------------------------
Capital Raised
Issue Name Lead Manager Using DRs US$
-----------------------------------------------------------
China Unicom
Limited Morgan Stanley Dean Witter 2,060,121,524
Telefonos
de Mexico
S.A. de C.V Morgan Stanley Dean Witter 1,692,069,444
Deutsche
Telekom AG Deutsche Bank 1,415,869,424
Taiwan
Semiconductor
Manufacturing
Company Ltd. Goldman Sachs 1,167,873,850
Grupo Televisa,
S.A. de C.A. Merrill Lynch 1,115,707,500
Royal Bank
of Scotland Salomon Smith Barney 1,000,000,000
Petrochina
Co. Ltd. Goldman Sachs 679,715,252
Infineon
Technologies
AG Goldman Sachs 659,237,880
ASM
Lithography
Holding, NV Goldman Sachs 624,340,010
Chartered
Semiconductor
Manufacturing
Ltd. Salomon Smith Barney 621,185,500
Royal Bank
of Scotland Goldman Sachs 500,000,000
Hanaro Telecom Goldman Sachs 372,240,000
Activcard S.A. JP Morgan Secs 285,413,850
ST Assembly
Test Services
Ltd. (STATS) Salomon Smith Barney 273,037,800
Siliconware
Precision
Industries
Co., Ltd. CS First Boston 254,700,000
Koninklijke
Ahold N.V. ABN Amro Holding 216,653,184
Carrier1
International
S.A. Morgan Stanley Dean Witter 209,139,026
Telecom
Argentina STET
- France
Telecom S.A. JP Morgan Secs 169,000,000
ASM
International
N.V. CIBC World Mkts 166,750,000
Grupo Iusacell,
S.A. de C.V. JP Morgan Secs 159,209,064
-----------------------------------------------------------
Source: Citibank and other depositaries
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