ADRs Weighed Down

ADRs Weighed Down.

Overseas shares that were traded in America fell Wednesday, December 03, 2008 thanks to the steep decline of basic materials and the financials sectors as well as the increasingly strengthening dollar. According to the Bank of New York Mellon’s index of leading American Depositary Receipts (ADRs), the .BKADR slid down by 1 percent while the Dow Jones industrial average – which is made up of 30 shares – gained 0.5 percent.

Metal prices have slumped and it has set off a serious downward spiral in basic materials companies’ shares as well. American mining company Freeport-McMoRan decided to suspend their dividends and cut their capital expenditure more than half because of it and they lowered the amount of copper they are mining because of the slumping metal prices.

Additionally, the ADRs of British miner and Rio Tinto plc – usually an index heavyweight – fell by 15 percent, stopping at $66.29. Brazilian miner Vale lost 6.3 percent and their shares fell to $9.89. Both of the mining companies are listed on the New York Stock Exchange and the hits to their ADRs could prove costly in the future. Japanese mining company Orix saw its New York traded shares drop 12.7 percent to $27.89 on the New York Stock Exchange.

As the ADRs suffered, the ICE Futures’ dollar index actually rose 0.4 percent thanks to expectations of an interest rate decision from the central banks of the Euro Zone, Britain, and Sweden. The Bank of New York Mellon’s index of leading European and Asian ADRs was down 0.7 percent with the MSCI index of stocks in the Asian-Pacific rim and not including Japan was up by 0.6 percent. Shanghai Composite was up 4 percent and Tokyo’s Nikkei average jumped up 1.8 percent.

FTSEurofirst 300 index of top European shares saw a gain of 0.55 percent thanks to the efforts of drag manufacturer and telecoms. Even though they were up, investors are still waiting for rate cuts. Novartis was up 3.4 percent closing at $46.90 while ArcelorMittal fell to $20.48, a drop of 4.5 percent.

The rise of the American dollar hit the ADRs in Latin America very hard and the Bank of New York Mellon’s regional sub index seeing a fall of 2.4 percent and the MSCI stock index falling 1.64 percent. However, local companies that serve as benchmarks saw gains, with Brazil’s Bovespa index up 0.9 percent, Argentina’s Merval up 1.9 percent, and Mexico’s IPC up 1.8 percent.