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Issuance slumps with regulatory and market pressure

New issuance of American depositary receipts is being hit hard at the moment, despite growing demand from investors in the product. JPMorgan research estimates that total ADR capitalization at the end of last year accounted for $650 billion, around 33% of all foreign investment in the US, yet new ADR issues from Europe have virtually dried up. Plentiful issuance from Europe, the Middle East and Africa, which accounted for 60% of supply in 2000 in the era of large-scale transatlantic acquisitions funded through stock such as Vodafone's acquisition of AirTouch and large IPOs is now a thing of the past. Many major European corporates already have a US listing but others are being put off by uncertain equity market conditions and new regulatory burdens with the introduction of the Sarbanes-Oxley Act.

?There has been a real slowdown as most large European companies already have a listing in New York or an over-the-counter ADR programme,? says Patrick Colle, global head of ADRs at JPMorgan Institutional Trust Services. ?Of the potential issuers, for Latin American and Asian companies that need to raise capital in the US, a US listing makes perfect sense and Sarbanes-Oxley doesn't appear to be such a negative.

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