The relationship between Tencent (00700.HK) and Tencent ADR (TCEHY)? Because the second kind of ADR belongs to OTC trading, the trading volume is generally small, so there will be liquidity problems.

Generally speaking, because the first kind of ADR is officially listed for trading, its trading volume is not low, and the market activity is OK. There are mainly two kinds of companies, one is companies that have directly issued ADS for formal trading in the United States, such as BABA, Pinduoduo, Futu Holdings Limited, NIO Inc., and so on the other is Tencent ADR (TCEHY), Meituan ADR (MPNGY), BYD ADR (BYDDY) and other companies, which are not officially listed on the US securities market and are only traded in OTC (over-the-counter market). Let's go back to a knowledge point that we want to focus on today, why some Chinese stocks ADR look different. Is there any difference between Tencent ADR (TCEHY) and BABA ADR (BABA)? ADR is a transferable certificate issued by American commercial banks to facilitate the trading of foreign securities in the United States. citizens can buy is initiated by banks and brokerage firms.ĪDS is issued in the United States by a trustee authorized by a foreign company (Trustee).

ADR says interest in foreign stocks that U. Most of the par value of ADS is only a fraction of the par value of collateralized stocks, while ADR mostly uses several units (such as 10 shares) as a unit of ADR.ĪDS is sponsored by stock issuers that want to attract US investors without having to list on the US market. The underlying ADS usually corresponds directly to the common stock of a foreign company, in other words, the ratio of ADS to common stock is usually 1, while the ratio of ADR to ADS is freely set by the company. However, usually a property certificate can only represent a house, but an ADR can represent a number of ADS.įor example, a British company, XYZ, can trade ADR on the New York Stock Exchange, and these ADR can be issued at five ADR equal to one American depositary share (5:1) or at any other rate the company chooses. When trading, transfer the property certificate, there is no need to move the house here. It can be understood vividly that ADR is the proof of investors' ownership of ADS, just like the property certificate to the house. What is ADS?ĪDS, American Depositary shares (American Depository Shares), is the actual underlying stock represented by ADR. Therefore, each ADR represents two shares of ABC and should therefore be sold at a price of $10.ĪDR is kept in the vault of Bank of America Corporation, where they were issued, and ADR simplifies the process of exchanging foreign shares: by trading only receipts, investors do not have to worry about any exchange rate differences or need to open special brokerage accounts, and entitle investors to all dividends and capital gains. Each ADR represents the corresponding shares of the listed company according to the corresponding exchange ratio.įor example, suppose the shares of ABC, a fictional Australian company, are traded on the Australian Stock Exchange at A $6.70 (US $5), and Bank of America Corporation buys a certain amount of ABC shares at 2:1 and sells ADR. What is ADR?ĪDR, or American depositary receipts (American Depository Receipts), are depositary receipts issued by American depositary banks, sold to American investors and traded on the American securities market. Indirect listing: listing through ADR/ADS.Ĭompared with Cayman, Virgin Islands and other places, the US government has much stricter supervision over listed companies, with long listing time, high cost and high taxes, so a large number of companies choose indirect listing, that is, ADR/ADS listing through American depositary institutions.

So if foreign companies want to raise money in the US market, there are two ways:ĭirect listing: register a company in the United States, and then pack the main body of the listing into the United States company. Before we explain ADR/ADS, let's take a look at the rules governing the listing of non-American companies on US stock exchanges.Īccording to the relevant policies of the US government, companies registered outside the United States are not allowed to be listed directly in the United States.

American depositary shares