US investors seek exposure to European blue chip companies with a 117% increase in DR trades
Despite falling equity prices across Europe, there has been a sharp rise in the purchase of European blue chip American Depositary Receipts (ADRs) – securities issued by European companies and traded on US exchanges, says Chris Hanley, Regional Manager UK and Ireland, BNY Mellon…
Issuance of European ADRs has hit record levels in 2011 with 34.4 billion depositary receipts (DRs) being traded globally compared to 31.5 billion for 2010 - a 9% year on year increase. However, for August the figures show a dramatic 117% increase from 2.9 billion ADRs traded in August 2010 rising to 6.3 billion ADRs in August 2011.
This increased demand is coming from US institutional and retail investors who are looking for exposure to European blue chip companies offering high dividends. Fund managers whose mandates are restricted to buying US securities, use ADRs to access equity investment in overseas companies.
Three of the highest traded stocks currently are Alcatel-Lucent, Vodafone and BP, with Alcatel Lucent accounting for over USD2.5 billion alone.
Over thirty per cent of the DRs we have issued in September are for companies headquartered in the Eurozone. Companies from France, Norway and Belgium have seen the highest increases in volumes traded and with some dividend yields exceeding 4 per cent it is likely that the DRs of European companies will remain a very attractive offering for investors.”
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