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Citi Depositary Receipt Services Year-End 2016 Report
A message from Nancy Lissemore,
Citi’s Global Head of Depositary Receipt Services
Dear Clients and Friends,
2016 was the year of disruption. Populist trends emerged around the globe and
culminated in Brexit and the result of the U.S. election. 2016 also witnessed weak
economic growth globally. As a result, we saw difficult global markets and diminished
investor risk appetite which made 2016 a tough year for emerging markets and also
the slowest year for new listings in more than a decade. The DR market was affected
as well. We saw slightly lower capital raising and lower trading volumes than the year
before and a very limited number of IPOs. Nevertheless, investor interest in the DR
product remained strong as reflected by successful corporate actions such as the
Nokia-Alcatel M&A transaction and a rise in DRs outstanding.
A trend that gained momentum in 2015 continued in 2016: We once more saw non-
U.S. issuers accessing the U.S. markets through the JOBS Act of 2012 (12 IPOs); thus
taking advantage of the decreased regulatory burden for IPO companies with less
than $1 billion in revenue. We expect this trend to continue in 2017 with a healthy
pipeline of global companies looking to access the U.S. market through the JOBS Act.
Another trend that continued last year is the strongly growing focus on corporate
governance by corporates and recently also by sovereigns. This is the result of
institutional investors taking a more active stance towards the companies they
invest in and sovereigns pushing their companies to embrace best corporate
governance practices in order to make their equity markets as well as their
corporates more attractive to foreign investors. Regulators, along with stock
exchanges, have introduced new stewardship codes in Hong Kong, Japan, Taiwan,
Thailand, Singapore, South Korea and Brazil to encourage better engagement
between companies and investors. Investors today place the same emphasis on
good corporate governance whether their investment is in the U.S., Europe or any
other country in the world. In our many events that we organize globally, we have
addressed this subject in depth to help our issuers understand and prepare for
investor expectations.
We are optimistic for 2017. Due to pent up demand, we are seeing a strong pipeline
of IPOs globally and we believe that investor interest will propel many of these
deals to come to market. U.S. investors continue to show strong interest in non–U.S.
equities as demonstrated by international investment of $7.2 trillion in Q3 2016,
which was up 9% from the same point in 2015, and also the continued interest in
unsponsored ADRs. We also remain confident that international investors continue
to demand access to debt instruments accessible through GDNs.
On behalf of the Citi Depositary Receipt Services team, we look forward to continuing
to provide global issuers, investors and intermediaries with capital market cross-
border solutions. We hope you gain valuable insights from our 2017 report.
Sincerely,
Nancy Lissemore
Nancy Lissemore
Managing Director
Global Head of
Depositary Receipt
Services
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