Depositary Receipts Capital Raising in Asia Pacific Increases Significantly in 2009 According to J.P. Morgan's Inaugural APAC Year in Review Report

DR IPO Capital Raising in APAC Up Fourfold in 2009;
DR Liquidity Remains High in the Region, Near the Record Levels of 2008

J.P. Morgan Leads DR IPO Capital Raising in APAC, with a 44% Market Share in 2009;
Selected as Depositary Bank for Three of the Region's Top Five ADR IPOs in 2009

Hong Kong, February 11, 2010 –In a year of gradual economic recovery, the issuance and trading of depositary receipts (DR) in 2009 remained strong in the Asia-Pacific region, especially in key markets such as China, India and Taiwan, according to J.P. Morgan's inaugural Depositary Receipt APAC Year in Review 2009.

In 2009, IPO capital raising in the region through DRs was four times higher than in the previous year, as 26 new issuers raised over $4 billion, compared with 18 issuers raising $871 million in 2008. DR liquidity also remained extremely high, with 36 billion DR shares traded on APAC DR programs in 2009, close to the record 38 billion shares traded in 2008.

The majority of DR IPO capital raising in 2009 were from APAC, with 26 issuers from the region overall, compared to 28 globally.

"The depositary receipt has proven its resilience as a cross border capital raising instrument in a volatile market," said Kenneth Tse, Asia Pacific head of J.P. Morgan's Depositary Receipts business. "As the global financial crisis subsides, the depositary receipt will play an even bigger role as a capital raising tool in funding the growth of the emerging APAC economies."

Other key findings from J.P. Morgan's “Depositary Receipts – APAC Year in Review 2009” report include:

• 47 issuers from 7 countries in APAC created 54 new DR programs in 2009, increasing the total number of sponsored DR programs from APAC issuers to 942.
• New York-listed American Depositary Receipts (ADR) continued to dominate DR IPO capital raising by APAC issuers, driven primarily by Chinese issuers. The Shanda Games NASDAQ $1 billion IPO was the standout deal of the year, since it was the largest ever DR single listed IPO offering from China. J.P. Morgan serves as the depositary bank on this landmark program.
• Secondary offerings were an important source of capital for issuers from the region: 21 existing issuers from APAC raised $5.2 billion in the U.S., Europe and Asia through follow-ons in 2009, compared to $2.2 billion raised by 16 issuers in 2008.
• As relations between mainland China and Taiwan improved, four new issuers from Hong Kong, listed on the Taiwan Stock Exchange in the form of Taiwan Depositary Receipts (TDR) in 2009.
• Several major Asian issuers delisted and deregistered from the NYSE or NASDAQ in 2009 to trade OTC.

Unsponsored DR Programs

There continued to be a rapid increase in unsponsored ADR programs in 2009, as global depositary banks continued to create ADR programs, often without investor interest or issuer consent. Since the SEC rule change in October 2008, more than 50 unsponsored programs, mostly from Japan, have been terminated as issuers expressed discontent on depositary banks’ establishment of such programs without their consent. J.P. Morgan continued with its collaborative, consultative and transparent approach with the issuer prior to the establishment of unsponsored programs.

 Themes to Watch in 2010

• IPO Capital Raising: Issuers from emerging markets will increasingly use DRs to raise capital, with APAC expected to be the most active region. China and India will be at the forefront of this wave of capital raising, followed by Taiwan. Newer markets, such as Vietnam, will emerge in the next 18 to 24 months.

Private equity and venture capital firms will continue to use DR IPO offerings to exit their investments, especially in emerging market high growth sectors, such as e-commerce, biotech, alternate energy, internet and consumer sectors.

• Local DRs: DRs structured to tap equity investors in emerging markets, known as “local DRs”, will continue to develop. Hong Kong's HKEx allows foreign issuers access to Asian investors through Hong Kong DRs and the first Indian DR is expected to launch in the second half of 2010. Issuers from China and Singapore are expected to use TDRs to list on the Taiwan Stock Exchange.
• New OTC Level 1 Markets: The Indian government is considering a proposal to amend existing rules that govern ADRs to allow Indian companies easier access to the U.S. market through Level 1. The primary driver for Indian issuers to establish a Level 1 program will be to diversify their investor base and build a presence in the U.S. market.
• Alternative Trading Venues: Alternative trading venues for DRs will emerge as more ADRs and GDRs are made eligible to trade in electronic markets. While this will lead to increased liquidity, primary exchanges like NYSE, NASDAQ and London will continue to dominate overall liquidity.
• Delisting: A select number of companies will continue to delist and deregister their ADR programs from U.S. exchanges to trade OTC.
• Future Risks: Volatile markets could limit the growth of the DR industry in 2010. In Asia, there is the possibility that inflation could arrive earlier than expected. There could also be risks associated with the timing and effects of the withdrawal of fiscal and monetary stimulus by the region’s governments.

J.P. Morgan Continues DR Industry Leadership

J.P. Morgan launched the first depositary receipt program in Asia in 1961 for Sony and serves as depositary bank for leading companies throughout the region. With a 44% market share in DR capital raising in 2009, J.P. Morgan worked on many of the key deals in APAC, confirming its status as market leader.

In APAC, J.P. Morgan acted as the depositary bank for three of the five largest ADR IPOs in 2009, including the $1 billion IPO of Shanda Games. This complements J.P. Morgan’s global success in emerging markets, as the bank was also the depositary bank for the largest DR IPO last year, the $4.5 billion New York-listing of Brazil’s Banco Santander Brasil.

DR programs managed by J.P. Morgan, both globally and in APAC, are on average more liquid compared to programs managed by its competitors. The average trading value of a J.P. Morgan DR program in APAC is $1 billion and the average trading volume is 74 million shares.

Further recent successes include:

• New Mandates: J.P. Morgan became the successor depositary bank for United Microelectronics Corporation’s (UMC) ADR program, which is Taiwan’s second-largest DR program. This was the largest 2009 program switch in Asia. Also in 2009, leading Chinese companies Tsingtao Brewery and China Real Estate Information Corporation selected J.P. Morgan as their depositary bank.
• Renewed Mandates: J.P. Morgan’s high-profile clients such as Sony, Nissan Motor, Korea Electric Power Corporation (KEPCO) renewed their contracts in 2009.
• Continued Innovation: J.P. Morgan introduced I&C Lock, a patented product that allows broker-dealers to purchase a contract that establishes a fixed rate for future DR issuance or cancellation without any obligation to execute the transaction.
• Strong Start to 2010: In the first few weeks of the year, J.P. Morgan was selected as depositary bank by IFM Investments Limited and Insprit.

For market information on DRs and international equities, please go to J.P. Morgan’s award-winning web site www.adr.com. For more information on J.P. Morgan’s DR services, please visit http://www.jpmorgan.com/visit/adr.

About J.P. Morgan Worldwide Securities Services
J.P. Morgan Worldwide Securities Services is a premier securities servicing provider that helps institutional investors, alternative asset managers, broker dealers and equity issuers optimize efficiency, mitigate risk and enhance revenue.  A division of JPMorgan Chase Bank, N.A. (NYSE: JPM), J.P. Morgan Worldwide Securities Services leverages the firm’s unparalleled scale, leading technology and deep industry expertise to service investments around the world.  It has $14.9 trillion in assets under custody and $5.1 trillion in funds under administration.  For more information, go to www.jpmorgan.com/visit/wss.

About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. In Asia Pacific, J.P. Morgan operates through 26 offices in 15 countries and has developed its wholesale banking franchise during a history of almost 160 years in the region. More information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.