Year-End 2018 Report

Citi Depositary Receipt Services Year-End 2018 Report A message from Nancy Lissemore, Citi’s Global Head of Depositary Receipt Services Dear Clients and Friends, 2018 continued for several quarters with record breaking global growth, notwithstanding disquieting signs on the horizon. Geopolitical worries eventually slowed the markets in the fourth quarter. The U.S.-China trade war, the Fed interest rate hikes, Brexit and other uncertainties ultimately affected investor sentiment. However, throughout all of 2018 investor interest in the depositary receipt (“DR”) product remained strong, evidenced by the value of DRs held by institutional investors, which reached all-time highs, as well as the robust capital raising in DR form by non-U.S. issuers. Initial public offerings via DRs soared to the highest level in four years and DRs remained an attractive option for foreign issuers seeking capital markets access in the U.S. The number of Chinese companies listing in the U.S. surpassed 2017’s previous four-year high. The uptick in the amount of capital raised coincided with higher trading volumes as well as higher trading values, both in line with increased market volatility and overall market conditions. We are excited to see a number of new market initiatives in the DR space, especially the creation of the Shanghai-London Stock Connect (“SLSC”). The SLSC’s vision is to enable global investors access to China “A” share companies via global depositary receipts (“GDRs”), while at the same time permitting Chinese investors access to qualifying LSE-premium listed shares via Chinese depositary receipts (“CDRs”). We have also seen renewed activity in some markets: Kazatomprom’s IPO in London launched in November and was the first by a large Kazakh company in more than a decade, while we also saw another IPO from Argentina with the closing of Central Puerto early in the year. Investor focus on environmental, social and governance (“ESG”) factors continued to rise, thus making it a pertinent topic in our conversations with clients. While we hear from clients that their investors are still mostly concerned with corporate governance practices, more and more conversations are taking place — especially in certain industries — that address environmental issues, GHG emission, climate change, sustainability, supply chain and human rights issues. With assets under management (“AUM”) focused on ESG factors still rising dramatically around the globe, we continued to update our clients on the various developments concerning this subject throughout the year. MiFID II, a European regulation that was ratified in January 2018, is starting to have impact even outside of Europe. It is leading to a decrease in research and a desire of investors to schedule meetings directly with a company to avoid paying for company access. We have advised many of our clients on the impact of MiFID II and have helped them to find and meet investors in the post-MiFID II world. Shareholder activism has grown outside of the U.S. and is now strong in Europe and growing in Asia. Our Strategic Shareholder Advisory Group has provided guidance to clients to have the right strategies in place to be prepared for and/or have the right response to an activist attack. The Citi DR IR Advisory team has addressed all these subjects along with various others that are relevant to IR officers in the many events we organized globally throughout 2018. Looking towards 2019, we see a healthy pipeline of IPOs aiming to come to market to tap the strong investor demand for non-U.S. equities. Trade war tensions and other geopolitical uncertainties, however, may present challenges to the market conditions and might create headwinds to issuers seeking to access the U.S. market. International investment in non-U.S. equities stood at a record $1.0 trillion in Q3 2018 (up from the same point in 2017) — we believe that this number will go even higher in 2019. Looking at the growth in our fixed income portfolio, we are confident that investors will continue to demand access to international debt instruments through GDNs as we continue to open new markets. The Citi Depositary Receipt Services team looks forward to continuing to provide issuers, investors and intermediaries with cross-border capital markets solutions in the coming year. We hope you find valuable insights in our year-end 2018 report. Sincerely, Nancy Lissemore Nancy Lissemore Managing Director Global Head of Depositary Receipt Services Welcome