Citigroup Finds ADR Capital Raising Surges in 2nd Half of 2003 - Overall Momentum for the Year Driven by Asia/Pacific
Taiwan drives 32% increase over
last year in capital raised using ADRs
Emerging market activity underlies volume increase of 13% and trading
value increase of 11% over 2002
Citigroup today reported that capital
raised in the form of American Depositary Receipts (ADRs) by non-U.S.
companies through December 15th was $9.3 billion, up 32% from $7.0
billion in 2002. Taiwanese companies accounted for 87% of the total,
with the focus on technology. Benchmark issuer Taiwan Semiconductor
topped the list, raising $1.99 billion in two offerings. Other sizeable
capital raisings by technology companies included transactions by
Chi Mei Optoelectronics, raising $637 million, plus Quanta Display,
Chunghwa Picture Tubes, Nanya Technology, Hannstar Display and CMC
Magnetics. Outside of the technology sector, Chunghwa Telecom raised
$1.59 billion, China Steel completed a $936 million offering, and
Cathay Financial and First Financial each raised in excess of $500
million.
Reflecting the second quarter rally in global equity markets and the
end of the SARS virus crisis in Asia, 99% of the total $9.3 billion
capital raised occurred after April 2003. “The surge in capital
raising in the latter part of the year indicates a trend that’s
going to continue,” said Sanjeev Nanavati, Managing Director
of Depositary Receipt Services, Citigroup. “Many Taiwan issuers
favored convertible bonds in 2003, but with the prospect of higher
interest rates ahead, we believe ADRs will be the preferred capital
raising tool for 2004.”
ADR trading volume for 2003 is projected to increase 12.9% over 2002
to 31.9 billion shares (based on November YTD annualized figures),
and trading value is projected to increase 11.0% from last year’s
levels to $619.0 billion. By contrast, for the U.S. market (excluding
ADRs), 2003 trading volume is projected to be 733 billion shares (based
on November YTD annualized figures), down 3.5% from last year, while
value is projected to be $16.6 trillion, down 6.1% from 2002. This
increased investor appetite for non-US stocks was reflected in the
relative November YTD returns of the Bloomberg ADR Index, up 37.4%,
and the S&P 500 Index, up 22.3%, a 15% spread.
The 12.9% growth in trading volume was primarily driven by the Asia/Pacific
region, but all regions showed significant year-on-year gains.
Growth in ADR Trading Volume Worldwide
(Volume in millions)
| Region | 2002 | 2003P* | % Change |
| Asia/Pacific | 5,011 | 7,504 | 49.8% |
| CEEMEA** | 2,941 | 3,275 | 11.3% |
| Latin America | 4,104 | 4,367 | 6.4% |
| Western Europe | 16,169 | 16,706 | 3.3% |
| Total World | 28,225 | 31,852 | 12.9% |
*November 2003 YTD Projected
**Central, Eastern Europe, Middle East & Africa
The 11.0% growth in trading value was paced by the emerging markets. Western Europe declined slightly from 2002. This growth is reflected in relative market index performance. Year-to-date through November 2003, the MSCI Emerging Markets Free index was up 44.1%, while the MSCI Developed Europe index increased by 24.6%, a spread of nearly 20%.
Growth in ADR Trading Value Worldwide
(Volume in US$ millions)
| Region | 2002 | 2003P* | % Change |
| Asia/Pacific | 76,401 | 123,090 | 61.1% |
| CEEMEA** | 47,261 | 67,642 | 43.1% |
| Latin America | 69,725 | 76,970 | 10.4% |
| Western Europe | 364,460 | 351,328 | -3.6% |
| Total World | 557,847 | 619,030 | 11.0% |
*November 2003 YTD Projected
**Central, Eastern Europe, Middle East & Africa
Greatest Increases Seen in Banking and Technology Sectors
Industry sector analysis reveals that the strongest growth in ADR trading value worldwide over 2002 occurred in Banking, with 61% gains to $40.4 billion, Technology, with 43% gains to $89.1 billion, and Mining and Metals, with 29% gains to $41.4 billion. While the growth rate in Telecom was sluggish, it remained the dominant sector in ADR trading with overall value at $140.56 billion. Nokia held the number one spot in both value and volume for the second consecutive year.
ADR Trading by Sector
| Sector | Value 2003P* (US$ billions) | % Change in Value over 2002 | Volume 2003P* (billions) | % Change in Volume over 2002 |
| Banking | 40.39 | 61% | 1.54 | 39% |
| Technology | 92.96 | 43% | 6.58 | 41% |
| Mining and Metals | 41.36 | 29% | 2.81 | 14% |
| Chemicals and Pharmaceuticals | 88.15 | 17% | 3.42 | 6% |
| Telecommunications | 140.56 | 2% | 8.79 | 5% |
| Energy | 89.15 | -16% | 2.46 | -20% |
| Sub-Total | 492.57 | 12% | 25.61 | 12% |
| Total All Sectors | 619.03 | 11% | 31.85 | 13% |
*November 2003 YTD Projected
Appetite for Non-U.S. Equities Continues to Grow Among U.S. Investors
According to the U.S. Federal Reserve, total U.S. investment in non-U.S. equities (both ADRs and non-U.S. shares) increased by $168 billion (12.5%) through the second quarter of 2003 to $1.5 trillion. Increasing asset values accounted for $121 billion of the total increase, while net capital inflows accounted for $47 billion.
U.S. Investment in Non-U.S. Equities (ADRs and Ordinary Shares)
Net Cash Flow (US$ billions)
| Year | US Investment in Non-US Equities | Change Due to Capital Flows | Change Due to Asset Values | Net Change | % Change |
| 1996 | 1,003 | ||||
| 1997 | 1,208 | 57.6 | 147.4 | 205.0 | 20.4% |
| 1998 | 1,476 | 101.3 | 166.7 | 268.0 | 22.2% |
| 1999 | 2,004 | 114.3 | 413.7 | 528.0 | 35.8% |
| 2000 | 1,853 | 106.7 | (257.7) | (151.0) | (7.5%) |
| 2001 | 1,613 | 109.1 | (349.1) | (240.0) | (13.0%) |
| 2002 | 1,345 | 17.7 | (285.7) | (268.0) | (16.6%) |
| 2Q03 YTD* | 1,513 | 47.1 | 120.9 | 168.0 | 12.5% |
*Latest available data. 3rd quarter 2003 data will not be released until January 8, 2004
Citigroup has also found that individual investor appetite for non-U.S. equities continued to grow through self-directed mutual funds. According to the Investment Company Institute, nearly $16.3 billion flowed into international equity mutual funds (both ADRs and non-U.S. shares) during the first ten months of 2003. In October, $4.9 billion flowed into international mutual funds, accounting for nearly 20% of total equity mutual fund inflows.
International Equity Mutual Funds Show Net New Cash Flows in 2003
(US$ billions)
| Fund Type | October 2003 | October 2003 YTD |
| Emerging Markets | 0.7 | 2.2 |
| International Developed (1) | 3.4 | 12.6 |
| Regional Equity (2) | 0.8 | 1.4 |
| Total Int’l Funds | 4.9 | 16.2 |
| Total U.S. Equity (3) | 19.4 | 106.5 |
(1) Excludes global funds that include both U.S. and non-U.S. equities.
(2) Includes both developed and emerging market regions.
(3) Excludes global and international equity funds.
“The momentum in ADR activity we’ve seen in the last few months accentuates a pattern that has continued over time: investors in ADRs and non-U.S. shares continue to seek value in geographic and industry diversification,” said Nanavati. “ADRs continue to provide U.S. investors with opportunities to own some of the world’s most attractive companies.”
Top 20 Cross-Listed ADRs by Trading Volume – November 2003 YTD
| Issuer | Country | Exchange | Ticker | Volume (mil) |
|
| 1 | Nokia Corporation | Finland | NYSE | NOK | 2,660 |
| 2 | Taiwan Semiconductor Mfg. Co. (TSMC) | Taiwan | NYSE | TSM | 1,611 |
| 3 | Elan Corp plc | Ireland | NYSE | ELN | 921 |
| 4 | United Microelectronics Corporation (UMC) | Taiwan | NYSE | UMC | 897 |
| 5 | LM Ericsson Telephone Co. | Sweden | NASDAQ | ERICY | 819 |
| 6 | BP plc | U.K. | NYSE | BP | 757 |
| 7 | Durban Roodepoort Deep Ltd. | South Africa | NASDAQ | DROOY | 753 |
| 8 | ASML Holding, NV | Netherlands | NASDAQ | ASML | 729 |
| 9 | Vodafone Group plc | U.K. | NYSE | VOD | 718 |
| 10 | Royal Dutch Petroleum Company N.V. | Netherlands | NYSE | RD | 557 |
| 11 | Teva Pharmaceutical Industries Ltd. | Israel | NASDAQ | TEVA | 553 |
| 12 | Gold Fields Ltd. | South Africa | NYSE | GFI | 511 |
| 13 | Alcatel S.A. | France | NYSE | ALA | 507 |
| 14 | SAP AG | Germany | NYSE | SAP | 466 |
| 15 | Telefonos de Mexico S.A. de C.V. | Mexico | NYSE | TMX | 439 |
| 16 | STMicroelectronics N.V. | France | NYSE | STM | 420 |
| 17 | Harmony Gold Mining Co. Ltd | South Africa | NYSE | HMY | 363 |
| 18 | Tele Norte Leste Participacoes S.A. | Brazil | NYSE | TNE | 338 |
| 19 | Koninklijke Ahold N.V. | Netherlands | NYSE | AHO | 337 |
| 20 | AstraZeneca plc | U.K. | NYSE | AZN | 329 |
Top 20 Cross-Listed ADRs by Trading Value – November 2003 YTD
| Issuer | Country | Exchange | Ticker | Volume (US $mil) |
|
| 1 | Nokia Corporation | Finland | NYSE | NOK | 42,144 |
| 2 | BP plc | U.K. | NYSE | BP | 30,851 |
| 3 | Teva Pharmaceutical Industries Ltd. | Israel | NASDAQ | TEVA | 27,483 |
| 4 | Royal Dutch Petroleum Company N.V. | Netherlands | NYSE | RD | 24,192 |
| 5 | HSBC Holdings plc | U.K. | NYSE | HBC | 17,496 |
| 6 | Taiwan Semiconductor Mfg Co. (TSMC) | Taiwan | NYSE | TSM | 15,627 |
| 7 | Vodafone Group plc | U.K. | NYSE | VOD | 14,191 |
| 8 | Telefonos de Mexico S.A. de C.V. | Mexico | NYSE | TMX | 13,617 |
| 9 | AstraZeneca Group plc | U.K. | NYSE | AZN | 13,429 |
| 10 | SAP AG | Germany | NYSE | SAP | 13,054 |
| 11 | STMicroelectronics N.V. | France | NYSE | STM | 9,429 |
| 12 | LM Ericsson Telephone Co. | Sweden | NASDAQ | ERICY | 9,028 |
| 13 | ASML Holding, N.V. | Netherlands | NASDAQ | ASML | 8,922 |
| 14 | Unilever N.V. | Netherlands | NYSE | UN | 8,878 |
| 15 | GlaxoSmithKline plc | U.K. | NYSE | GSK | 8,774 |
| 16 | Sony Corporation | Japan | NYSE | SNE | 8,759 |
| 17 | Total Fina Elf S.A. | France | NYSE | TOT | 8,168 |
| 18 | Anglogold Limited | South Africa | NYSE | AU | 7,936 |
| 19 | News Corporation Limited | Australia | NYSE | NWS | 7,325 |
| 20 | Business Objects, S.A. | France | NASDAQ | BOBJ | 7,053 |
Top 25 Capital Raisings Using ADRs – YTD Through December 15, 2003
| Issuer | Country | Exchange | Event Date | Value (US$ mil) |
| Chunghwa Telecom Co. Ltd. | Taiwan | NYSE | 07/17/03 | 1,580 |
| Taiwan Semiconductor Mfg. Co. Ltd. | Taiwan | NYSE | 11/14/03 | 1,077 |
| China Steel Corp. | Taiwan | PORTAL | 10/22/03 | 936 |
| Taiwan Semiconductor Mfg. Co. Ltd. | Taiwan | NYSE | 07/14/03 | 909 |
| Chi Mei Optoelectronics Corp. | Taiwan | PORTAL | 10/24/03 | 637 |
| Cathay Financial Holding Co., Ltd. | Taiwan | PORTAL | 07/29/03 | 522 |
| First Financial Holding Co. | Taiwan | PORTAL | 07/28/03 | 503 |
| Quanta Display, Inc. | Taiwan | PORTAL | 10/02/03 | 310 |
| Daewoo Shipbuilding & Marine Engineering. Co. Ltd. | Korea | PORTAL | 06/09/03 | 241 |
| Nanya Technology Corp. | Taiwan | PORTAL | 07/17/03 | 232 |
| Chunghwa Picture Tubes, Ltd. | Taiwan | PORTAL | 10/08/03 | 227 |
| HannStar Display Corp. | Taiwan | PORTAL | 07/22/03 | 201 |
| CMC Magnetics Corp. | Taiwan | PORTAL | 10/03/03 | 162 |
| Unibanco S.A. | Brazil | NYSE | 09/24/03 | 154 |
| Telekomunikacja Polska S.A. (TPSA) | Poland | PORTAL | 11/05/03 | 153 |
| Flamel Technologies S.A. | France | NASDAQ | 10/03/03 | 152 |
| Quanta Computer Inc. | Taiwan | PORTAL | 11/26/03 | 141 |
| Benq Corp. | Taiwan | N/A | 07/09/03 | 123 |
| Corpbanca S.A. | Chile | PORTAL | 11/21/03 | 114 |
| INI Steel Co. | Korea | PORTAL | 10/09/03 | 107 |
| High Tech Computer Corp. | Taiwan | PORTAL | 11/20/03 | 105 |
| Sampo Corp. | Taiwan | N/A | 11/17/03 | 104 |
| Icon plc | Ireland | NASDAQ | 08/06/03 | 103 |
| KorAm Bank | Korea | PORTAL | 11/26/03 | 102 |
| Powerchip Semiconductor Corp. | Taiwan | PORTAL | 09/08/03 | 101 |
For more information on Citibank ADR programs, as well as industry trends and developments, please visit www.citigroup.com/adr
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