Adr Case Study
US investors can instruct their US broker to buy ADRs. The broker can either buy existing ADRs in the US market or buy foreign shares in the local market to create new ADRs. Similarly, investors can instruct their broker to sell ADRs. The broker can choose to sell ADRs in the secondary market or sell underlying shares in the local
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ADR trading value has increased in the two years afterwards. As of 2011, there are USD $3.2 trillion worth of ADRs trading globally, suggesting that ADRs are now widely used investment vehicle.
In more recent years, there has been a growing number of ADRs originating from Brazil, Russia, India and China (BRICs). The four countries have played important roles in the ADR markets. The market statistics suggest that BRICs collectively accounted for approximately 48% and 49% of total ADR trading volume the trading value in 2011, respectively. It seems to evidence that the BRICs grouping has led the global investment trends.
2.2 Background on BRICs Emerging Economies
The BRICs acronym stands for Brazil, Russia, India and China. The term was firstly floated by a Goldman Sachs’s paper in 2001, which attempts to project global economic trends over the next 50 years.17 It was anticipated that the emerging economies of the BRICs collectively would overtake the G6 (the US, Japan, the UK, Germany, France, and Italy) as a major force in the global economy in less than 40 years. The actual economic performance of the BRICs seems to supports the predictions. Economic liberalization made the BRICs achieved a rapid growth over the last decade. Via trade and investment, the BRICs’ emerging economies are increasingly integrating with the world market. In particular, the WTO officially approved …show more content…
For instance, the BRICs’ share of global GDP has risen from 16.4% in 2000 to 25% in 2010 and to 26.5% in 2012.18 Foreign Direct Investment (FDI) by BRICs has also increased significantly since 2000s. In 2010, the BRICs attracted more than US$1.5 trillion (about 12% of) world FDI flows, compared with about US$10 billion in the early 2000s.19 By the end of 2012, the four nations together have attracted more than 17 % global FDI projects. Among others, China, India and Brazil all finished in the top five most popular destinations for FDI.20 Both the exports and imports of the BRICs grew substantially as well, suggesting that the openness of the BRICs’ emerging economies has continuously evolved over time. During the period from 2000 to 2010, the BRICs as a whole doubled their share of global trade, while China contributed more than two-thirds of that growth. In 2010, the BRICs accounted for over 17% of the world total exports and almost 14% of the world total imports (Chen,