January through June 2012 has seen 79.5 billion depository receipts valued at USD1.49trn traded on the world’s markets and exchanges, the creation of 46 new sponsored programmes, and USD1.25bn raised through 11 DR initial public offerings and follow-on transactions, according to BNY Mellon’s Depositary Receipts Midyear Market Review.
For the same period last year, 80.5 billion DRs valued at USD1.91trn were traded. DR capital raisings and sponsored programme establishment also were down year-over-year.
In spite of a volatile first six months of 2012, the major DR market metrics were essentially flat or only slightly lower. Overall DR trading volume and values were down year-over-year, partly affected by global economic turbulence. The BNY Mellon ADR Index posted a 1.86 per cent year-to-date gain. In total, there are now more than 3,500 sponsored and unsponsored DR programmes available to the world’s investors, up from 3,413 a year ago.
“The first half of 2012 clearly was marked by global uncertainty, but portfolio diversification through DRs has offered a viable option to many investors,” says Michael Cole-Fontayn, chief executive of BNY Mellon’s Depositary Receipts business. “Many DR country and sector indices showed strong gains in the first half of the year and more than 40 new programs were established, showing the resilience of the DR market and that investors are actively using depositary receipts as an efficient way to access global equities.”
According to the report, oil and gas sector issuers led all industries with 14.7 billion DRs traded, valued at USD328bn. The two sectors with the largest percentage returns through June were beverages and diversified telecommunications, up 40 per cent and four per cent, respectively. The two lowest performing sectors were semiconductor and communications equipment, down 49 per cent and 52 per cent, respectively.
In terms of DR trading volume, construction materials and diversified telecommunication led the way, increasing 26 per cent and 25 per cent, respectively, year-over-year. The semiconductor and pharmaceutical sectors were down the most, 37 per cent and 21 per cent, respectively. Most active sectors as measured by new sponsored DR programmes in 2012 were oil and gas with six, followed by metals and mining and banks, which both added five.
The unsponsored DR market continued to grow, adding 114 new programmes in the first half of 2012. There are now were nearly 1,300 unsponsored DR programmes available to investors around the globe. Notable issuers that converted their unsponsored DR programmes to sponsored status included Japan’s Toppan Printing, South Africa’s Mr Price, and the UK’s Severn Trent.
During the first half of 2012, overall ADR performance, as tracked by the BNY Mellon ADR Index, was positive. On June 29, the ADR Index closed at 171.46, with total return of 1.86 per cent year-to-date. Year-over-year, the ADR Index was down 13.74 per cent.
The best performing DR country indices for the six-month period were the BNY Mellon Mexico ADR Index, which was up 17.96 per cent, followed by the BNY Mellon Chile ADR Index, up 10.14 per cent, and the BNY Mellon Japan ADR Index, up 9.45 per cent. In total, 19 out of 34 DR country indices posted positive returns for the first half of the year.
