DR Year End Report

Citi Depositary Receipt Services Year-End 2019 Report A message from Nancy Lissemore, Citi’s Global Head of Depositary Receipt Services Dear Clients and Friends, 2019 proved to be the year of global market resurgence primarily driven by a rebound in the U.S. market, even in the face of multiple headwinds, including a weak global economy, flat to negative corporate earnings, yield curve inversion, elevated geopolitical risks, unresolved trade wars and monetary policy uncertainty. Moreover, global markets posted their best year in a decade as investors on the whole shrugged off these uncertainties, propelled by a resilient consumer base and the Federal Reserve’s policy reversal on rate cuts and balance sheet expansion. This trend was evident in the 24% and 28% increase in the MSCI World Index and the S&P 500, respectively. Similarly, throughout all of 2019 investor interest in the depositary receipt product remained strong. This was evidenced by the resilience in the value of DRs held by institutional investors, which maintained all-time highs, as well as the robust capital raising in DR form by non-U.S. issuers. Secondary offerings via existing DR issuers soared to the highest level since 2010, as investors leveraged the DR tool in a durable market to seek capital markets access in the U.S. China-based issuers led initial public offerings (“IPOs”) and secondary offerings in DR form in 2019, raising a combined US$9.7 billion accounting for 57% of all DR capital raising activity. Prominently among new market initiatives in 2019 was the establishment of the Shanghai-London Stock Connect (“ Connect ”). Huatai Securities Co., Ltd, a leading integrated securities group in China, raised US$1.7 billion in its June 2019 GDR offering, being the first Chinese company to list on the London Stock Exchange via the Shanghai-London Stock Connect. Citi played an integral role in bringing the Shanghai-London Stock Connect to market, working closely with regulators, exchanges, law firms, custodians and brokers to help build the network and capabilities required to service issuers intending to utilize the Connect arrangement. More of these deals are likely to come to market in 2020, with Citi positioned at the forefront to service this market-changing initiative. 2019 also saw renewed activity in the Latin American equity markets, which experienced a rebound driven primarily by Brazil. This trend is expected to continue in 2020, propelled by Brazil’s privatization initiative and the anticipated public offerings of fintech companies. The significance of environmental, social and governance (“ESG”) in asset management continued to expand in 2019. The large variety of ESG frameworks can be overwhelming and the plethora of rating agencies and surveys offer little consistency in disclosure standards. This lack of standardization is very challenging and confusing for companies — and investors. In addition, the regulatory ESG reporting requirements/recommendations for issuers can vary significantly by country/region. The Citi ESG teams addressed the various ESG topics continuously throughout the year and we shared many of these reports with our clients. While both investors and corporates yearn for some type of standardization, we don’t anticipate this happening globally anytime soon, and thus we believe that we will be discussing the evolving ESG themes with our clients in meetings and in our events over the next several years. In a world where the shift to passive investments continues, companies need to adjust their investor outreach strategy to attract the active money. More clients have organized investor days that showcase management, dive deep into the investment story and outline the future strategy of the company. Additionally, companies are focused on targeting the right investors that are aligned in their investment horizon with the short and long term goals of the issuer. We are also encouraging clients to become more transparent and publish the right data that will be helpful in being included in the rapidly growing ETF universe. In our client meetings and our many global events — and especially our 5-day NY IR Academy for global issuers — we addressed all these and many other relevant IR topics. Looking towards 2020, 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 periodically 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 resilient at $1.0 trillion in Q3 2019 — we expect this number to grow higher in 2020. 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 generate valuable insights from our year-end 2019 report. Sincerely, Nancy Lissemore Nancy Lissemore Managing Director Global Head of Depositary Receipt Services Welcome