2. Should ADRs be added to your portfolio ?

What Happens in a Delisting?

  • Many investors were left scratching their heads when they found out their ADRs were delisted. Any delisting means that the share, unit, or ADR will stop trading on a major exchange. However, that doesn’t mean that it will no longer trade. Most of these ADRs will trade in OTC markets, making them much more illiquid and subject to large bid/ask spreads.
  • Due to these future issues, the value of ADRs may drop below the value of its underlying local shares. Of course, investors have the option of converting those ADRs back into the original local share in its local currency at any time.
  • Finally, it’s important to note that most of the largest Chinese companies are listed on the Hong Kong Stock Exchange. This stock exchange is very liquid, open to most brokers and most importantly, has a very stable currency.

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