Global depository receipt (GDR)
Global depositary receipts (or GDRs) offer a solution for investors wanting to buy shares listed in countries where there are government restrictions on who can own and trade them.
UK or US investors wanting to buy shares listed in emerging market countries like Russia can face a tough time when there are government restrictions on who can own and trade them. Global depositary receipts (or GDRs) offer a solution.
Instead of trying to buy the share in its local market, the investor typically UK or US - buys a depositary receipt, which represents the shares, instead. These are issued by investment banks, listed in the investor's home market and traded separately from the underlying share.
Apart from easier access, the key advantages of global depositary receipts include the fact they are priced in the investor's home currency (typically US dollars), carry lower dealing costs and pay more timely dividends, again in dollars, than the shares they represent. Whilst similar in most respects to American depositary receipts, GDRs tend to be listed in European markets like the London Stock Exchange whereas ADRs are more heavily traded in the US market.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
See Tim Bennett's video tutorial: Depository receipts: An easy way to invest in foreign firms.
-
Rightmove: Asking prices edge closer to record peak
Asking prices have been driven up by the top-end of the market, Rightmove has found. But how does the situation look in your area?
By Vaishali Varu Published
-
Coventry Building Society bids £780m for Co-operative Bank - what could it mean for customers?
Coventry Building Society has put in an offer of £780 million to buy Co-operative Bank. When will the potential deal happen and what could it mean for customers?
By Vaishali Varu Published