The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Equity markets depositary receipts: US investors lose out

A shift of depositary receipt issuance to London comes at a time of soaring interest in the asset class in the US.

London’s emergence as the preferred destination for companies seeking a secondary listing is a particular blow to US investors as it coincides with increasing demand in the US for foreign stocks and depositary receipts.

According to JPMorgan, institutional investment in the American depositary receipt market doubled between 2003 and 2006 to reach $600 billion, up from $500 billion in 2005.

The rise in interest has come about as a result of a fundamental shift in behaviour among US investors. Their holdings of non-US equities have increased to a record high of 18%, according to the Federal Reserve. Many leading investment advisers to US investors are now recommending allocations as high as 25% and in some cases as much as 35% to 40% in non-US equities.

"Whilst there has been no increase in new issuance there has been a strong increase in trading and investment in existing ADRs," says James Keane, EMEA region head of depositary receipts at JPMorgan. "Trading and investment in existing ADRs has reached record highs as US investors are allocating more to foreign equities and because ADRs are a very convenient way for them to hold foreign stock. There is also a pool of investors that’s obliged to hold foreign stock in ADR form as they are classed as domestic securities."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree