First half DR trading drops 16 percent in value, although BNY Mellon experts see budding recovery
Global trading in DRs continued its descent in the first half of this year, but Chinese, Russian and Japanese IPOs in the US pushed up total capital raised.
Global DR trading – which plunged an annual 26 percent in value last year – dropped a further 16 percent in the first half of 2013, to $1.26 tn, according to the mid-year report of financial services company BNY Mellon. In terms of the number of DRs, trading fell 10 percent year on year to $72 bn, mainly as investors sold out of emerging markets.
But capital raised via DRs in the first half more than tripled to more than $3.6 bn from $1.25 bn in the first half of 2013, boosted by IPOs in the US from Chinese online retailer LightInTheBox, Russian electronic payment processor QIWI, and UBIC, the first Japanese company to raise capital in the US since 2009, BNY Mellon says.
‘Taken together with the record highs reached by US markets earlier this year, these initial public offerings may be seen as ‘green shoots’ for a recovery in emerging equities that have been depressed by low interest rates for some time,’ says Christopher Kearns, CEO of BNY Mellon’s DR business, in the report. ‘Savvy global companies continue to gauge market and investor sentiment carefully, and many are eager to broaden their shareholder base through the convenience and reach of DRs.’
Asia-Pacific raised the most capital, at $1.67 bn in the first half, followed by central and eastern Europe, at $1.2 bn. The total number of DR programs open to investors rose to 3,700 at the end of the first half, from 3,500 a year earlier, the report says.
Western Europe was the most active region in terms of DR trading in the first half, with 23 bn DRs – valued at $493 bn – changing hands, followed by Latin America, with 19 bn DRs trading at a combined value of $312 bn and Asia-Pacific, with 15 bn DRs worth almost $290 bn. Eastern Europe saw around 12 bn DRs traded with a total value of $121 bn and the Middle East and Africa saw trading of 2.5 bn DRs at $41 bn.
