Power Lunch

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Power Lunch

Stock Screener: ADR Market Boom Hurting Wall Street?


There a little bit different take on today's "Stock Screener" segment--with a look at the ADR market. It had a banner year abroad--but not quite as stellar in the U.S. and that's casing more doubt on whether New York is still the world's financial hub. Contributor Ian McDonald from The Wall Street Journal sorted through the ADR market on "Power Lunch."

FYI: ADR's are a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange.

ADRs Soar in 2006

McDonald pointed to some interesting facts: the S&P ADR Index was up 23% this year and 10 points higher than the S&P and Nasdaq. Also--some $3.5 trillion dollars have been invested in non-U.S. stocks this year. AND there's a record $20.9 billion into non U.S. depository receipt IPO's. Another stat: some $1 trillion have been invested in foreign stock mutual funds. The fall of the U.S. dollar has helped overseas investment.

As for the issue of New York vs. London for financial supremacy--McDonald said that 81% of depository IPO's picked London or Luxembourg over New York. Compare that with 89% of non U.S. depository IPO's in the year 2000. McDonald says the issue of "over regulation" in the minds of foreign investors--is an issue and something New York City will have to overcome.