One simple and easy way for U.S.-based investors to gain exposure to foreign equities is investing via American Depository Receipts (ADRs). The number of overseas companies listing on the U.S. markets continues to increase each year. Currently about 1,194 companies can be accessed with the sponsored DR programs and another 1,064 trade as unsponsored ADRs (Source: Bank of New York Mellon ADR site). Among the organized exchanges, 300 firms are listed on the NYSE and 104 on the NASDAQ. The rest of them trade on the Amex and OTC markets.
The major depository banks in the U.S. are: JPMorgan (JPM), Citi (C), BNY Mellon (BK) and Deutsche Bank (DB). Some 81 new unsponsored programs were created in the first 11 months of 2010. Due to rising listing fees and regulatory requirements 11 foreign companies delisted from the organized U.S. exchanges and moved to the OTC last year.
The 10 most traded ADRs on the organized exchanges:
|1||National Bank of Greece||NBG||Greece|
|6||Taiwan Semiconductor Manufacturing||TSM||Taiwan|
The 10 most traded stocks on the OTCQX market:
|1||BG Group plc||BRGXF.PK||UK|
|5||Roche holding SA||RHHBY.PK||Switzerland|
|6||WalMart De Mexico SAB||WMMVY.PK||Mexico|
|9||Great Western Minerals Group Ltd||GWMGF.PK||Canada|
Note: The OTCQX market is the top tier of the OTC market where companies meeting the highest financial standards are listed.
Brazilian oil giant Petrobras (PBR) raised about $10 billion in a follow-on offering thru DR program in 2010 making it the largest-ever DR offering in history.
The top 20 global DR programs by value: (Click to enlarge)
The above chart includes DR programs listed on the London Stock Exchange (LSE).
Source: Depository Receipts - Year in Review 2010, JP Morgan