U.S. Individual Investors Surpass Institutions In Ownership of Foreign Stocks According to New Citibank Study.NEW YORK/LONDON/SINGAPORE--(BUSINESS WIRE)--December 16, 1998-- Demand 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 Expected to Outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, Demand For Ordinary, or Local Market Listed, Shares of Foreign Companies Performance of 20 Largest ADR ADR - Astra Digital Radio Programs Beat the S&P 500 in 1998; Trends Suggest a Recovery in the ADR Market and a Strong Launch for the euroDR(tm) in 1999 A new study by Citibank CITIBANK First National City Bank shows that U.S. individual investors now hold more foreign equities, either directly or through mutual funds, than U.S. institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . Historically, institutional investors were thought to be the largest holders of foreign equities, while individuals were thought to be somewhat more reluctant to buy stocks of non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. companies. In 1991, individuals accounted for only 21 percent of U.S. investment in foreign equities; by 1997, individuals accounted for an estimated 55 percent of total U.S. investment in foreign equities. That figure is expected to exceed 59 percent by 2003. Separately, in a review of the year in ADRs, Citibank reported that in 1998, both the number of new ADR programs and the dollar value of capital raised through ADRs declined sharply from 1997. Overall, 174 new programs were established in 1998, and 83 companies raised $9 billion. In 1997, 235 new programs were established, and 144 companies raised $18.6 billion. At the same time however, the twenty most actively-traded ADRs listed 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. (NYSE NYSE See: New York Stock Exchange ) actually out-performed the S&P 500 during 1998. As a group, these 20 non- non- word element [L.]not . non- pref. Not: noninvasive. U.S. companies have posted a 25 percent gain through December 9, 1998, versus a 23 percent gain for the S&P 500. "Volatility in the emerging markets clearly impacted opportunities for new ADR listings and capital raisings during 1998, but this slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. should not be viewed in any way as lack of interest from either issuers or investors," said James P. Donovan, Global Managing Director for Depositary Receipts at Citibank. "We have a healthy pipeline for the first half of 1999, and the remarkable performance this year of the 20 most active ADR listings has buoyed optimism among many foreign companies considering U.S. listings. This is particularly so for those considered to be blue-chip issuers." The Buyer Behavior Study Citibank's latest study on the depositary receipt (DR) market was undertaken to better understand the investment patterns of both institutional and 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. . "Although our findings were somewhat unexpected, the fact that individuals now hold more foreign stocks than institutions is understandable, given the wealth of educational information that has become available to the retail investor in recent years," noted Mr. Donovan. "We believe the market for ADRs and other types of DRs will continue to strengthen in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. It appears that U.S. investors truly value the credibility an exchange-listed DR adds to a foreign company's financial integrity." Other findings in the Citibank study indicate that investor demand for depositary receipts will significantly outpace demand for ordinary shares of foreign companies over the next five years. U.S. investor demand for DRs has grown 637 percent since 1991, and is projected to reach $773 billion by 2003. In addition to the shift in ownership profile and the increasing popularity of the DR, Citibank found that U.S. investors' overall demand for foreign equities has grown 260 percent since 1991, to over $1 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. , and is now projected to reach $2 trillion by 2003. Furthermore, the DR market as a percentage of total U.S. investment in foreign equities has doubled in recent years - from 18 percent in 1991 to 36 percent in 1997, and is projected to grow to 39 percent by 2003. The complete study is available upon request from Citibank. The ADR Market in 1998 As noted earlier, the market for new ADR programs and capital raisings suffered a significant downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in 1998. 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. Mr. Donovan, "Many companies that are considering using ADRs to raise capital chose to postpone post·pone tr.v. post·poned, post·pon·ing, post·pones 1. To delay until a future time; put off. See Synonyms at defer1. 2. To place after in importance; subordinate. offerings until some stability returned to the global markets." Based in part on this market volatility, existing programs were actively traded, and volumes again reached record levels. The dollar value of ADR trading is expected to reach $567 billion by year-end, a 13 percent increase from the $501 billion traded in 1997. At the same time, the number of shares traded should reach 15.5 billion, a 28 percent jump from the 12 billion shares traded in 1997. Citibank attributes these increases largely to volatility in the emerging markets. Companies from the United Kingdom were once again most active in establishing new programs; 20 British firms opened new ADR programs in 1998. The UK was followed by Brazil and Russia with 17 new programs each, the Ukraine (9) and Australia (7). Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. was the most active industry sector with 38 new programs, followed by Banking (24), Health & Personal Care (12), Electrical & Gas Utilities (10) and Energy Sources, Equipment & Services (8). Netherlands-based data networking concern 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>. completed the largest ADR offering of the year, raising $705 million. Other significant programs included Poland's Telekomunikacja Polska Telekomunikacja Polska S.A. (also known as TPSA or just TP) is a Polish national telecommunications provider established in December of 1991. Public company traded on Warsaw Stock Exchange, controlling stake is owned by France Télécom and Kulczyk Holding, with the ($601 million), National Australia Bank The National Australia Bank or NAB (ASX: NAB, LSE: NAB, NYSE: NAB, TYO: 8637 ) is part of the NAB Group. It is the largest bank in Australia by assets, and 28th largest in the world. ($450 million), Spain's ENDESA ($413 million) and the Australia & New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. Banking Group ($375 million). Continued Growth in Cross-Border Investment Suggests Recovery in 1999; euroDR(tm) Nears Launch Going forward, Citibank is projecting individual investment in foreign equities to grow by 13.5 percent annually, reaching $1.2 trillion by year 2003. Provided the recent trend toward stability in the emerging markets continues to build, these effects should combine to encourage many more non-US companies to raise capital through ADR offerings in 1999. The expected growth in cross-border investment will not be limited to the US. With the introduction of the euro The introduction of the euro took place principally between 31 December 1998, when the exchange rates between the euro and legacy currencies in the Eurozone became fixed, and early 2002, when euro notes and coins were introduced and the legacy currencies withdrawn. on January 1, 1999, it will become significantly easier for non-EMU companies to tap the burgeoning investor base that resides in what is now being called Euroland Euroland or Eurozone Noun the geographical area containing the countries that have joined the European single currency Euroland n → Eurolandia . "As the euro begins trading and the EMU emu or emeu (both: ē`my  ), common name for a large, flightless bird of Australia, related to the cassowary and the ostrich. continues to
strengthen, we're predicting a fairly rapid evolution of a
pan-European capital market," explains Citibank's Donovan.
"Beginning in 1999, Citibank will introduce the new euroDR(tm),
developed in conjunction with the Paris Bourse Paris BourseNational stock market of France. . Because a significant portion of the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. population is now grappling with the question of how to fund the cost of retirement, we believe there will be significant interest in the euroDR(tm) among retail investors." The euroDR(tm) will require the same level of disclosure that is required of companies that maintain exchange-listed ADRs in the US. The first euroDR(tm) offerings will most likely come to market during the first half of 1999. Citibank reports that Latin American issuers, particularly those from the telecommunications sector, may be among the first companies to offer the euroDR . 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 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: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.
Citibank/The Year in ADRs
Most Active ADR Programs
(Based on No. of Shares Traded, Through Sept. 30)
LM Ericsson Telephone Co. (NASDAQ) Sweden 1,124,946,000
Telecomunicacoes Brasileiras S.A. (NYSE) Brazil 735,807,800
Royal Dutch Petroleum Company N.V. (NYSE) Netherlands 419,558,100
Telefonos de Mexico S.A. de C.V. (NYSE) Mexico 390,888,700
P.T. Telekomunikasi Indonesia (NYSE) Indonensia 250,901,900
Nokia Corporation (NYSE) Finland 236,880,300
ASM Lithography Holding, N.V. (NASDAQ) Netherlands 224,666,000
Smithkline Beecham plc (NYSE) United Kingdom 211,131,300
YPF Sociedad Anonima (NYSE) Argentina 200,536,300
Alcatel S.A. (NYSE) France 189,267,000
Most Active ADR Programs
(Based on $ Value of Shares Traded, Through Sept. 30)
Telecommunicacoes Brasileiras S.A. (NYSE) Brazil $75.45 billion
LM Ericsson Telephone Co. (NASDAQ) Sweden $29.96 billion
Royal Dutch Petroleum Company N.V. (NYSE) Netherlands $22.03 billion
Nokia Corporation (NYSE) Finland $19.02 billion
Telefonos de Mexico S.A. de C.V. (NYSE) Mexico $18.82 billion
Smithkline Beecham plc (NYSE) United Kingdom$12.72 billion
British Petroleum Co plc (NYSE) United Kingdom$12.71 billion
Philips N.V. (NYSE) Netherlands $9.66 billion
Unilever N.V. (NYSE) Netherlands $9.51 billion
ASM Lithography Holding, N.V. (NASDAQ) Netherlands $8.14 billion
Top 10 Capital Raisings From Emerging Markets (Through Dec. 15)
Telekomunikacja Polska S.A. (PORTAL) Poland $601.0 million
Hellenic Telecommunications
Organizations S.A. (NYSE) Greece $330.1 million
STET Hellas Telecommunications S.A.(NASDAQ)Greece $297.0 million
Pliva d.d. (PORTAL) Croatia $205.3 million
Taiwan Semiconductor Manufacturing Company
Ltd(NYSE) Taiwan $184.6 million
Banque du Liban et D'Outre-Mer (N/A) Lebanon $166.9 million
Fubon Insurance Co., Ltd. (PORTAL) Taiwan $160.6 million
National Bank of Greece, S.A. (PORTAL) Greece $141.1 million
Moi Magyar Olaj-Es Gazipari Rt. (PORTAL) Hungary $109.2 million
Puhang Iron & Steel Co., Ltd. (NYSE) Korea $100.0 million
Top 10 Capital Raisings From Developed Markets (Through Dec. 15)
EQUANT N.V. (NYSE) Netherlands $705.5 million
National Australia Bank Limited (NYSE) Australia $450.1 million
ENDESA S.A. (NYSE) Spain $412.8 million
Australia & New Zealand Banking Group(NYSE)Australia $350.1 million
Swisscom AG (NYSE) Switzerland $292.5 million
Allied Irish Banks, plc (PORTAL) Ireland $250.0 million
Royal Bank of Scotland (NYSE) Scotland $250.0 million
Security Capital, Global Realty (N/A) Luxembourg $240.0 million
Eni S.p.A. (NYSE) Italy $234.0 million
Amvescap plc (NYSE) United Kingdom$193.6 million
Top 10 Countries
(Based on No. of New Companies Issuing ADRs - YTD)
Rank Country No. of issues
1 United Kingdom 20
2(tie) Brazil 17
Russia 17
4 Ukraine 9
5 Australia 7
6(tie) Greece 6
Poland 6
8(tie) Japan 5
Mexico 5
Turkey 5
New ADR Programs by Region
(Based on No. of New Companies Issuing ADRs - YTD)
Region No. of issues
Western Europe 63
Central & Eastern Europe 52
Central Asia 51
Latin America 30
Developed Asia 15
Africa 9
Emerging Asia 5
TOTAL 174
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion