Expand GDR - Global Depository Receipts
Global Depository Receipts (GDR) are financial instruments that represent ownership in a foreign company's shares. They are created and traded on international stock exchanges, allowing investors to diversify their portfolio and invest in companies outside their home country.
Key Points:
- GDRs are issued by international banks and are denominated in a currency other than the company's domestic currency.
- They provide investors with an opportunity to invest in foreign companies without directly buying their shares on a foreign stock exchange.
- GDRs are typically listed on major international stock exchanges, such as the London Stock Exchange or the Luxembourg Stock Exchange.
- They are traded and settled in a similar way to ordinary shares, allowing investors to easily buy and sell them.
- GDRs are popular among global investors as they provide exposure to international markets and companies, diversifying their investment portfolio.
- Companies issue GDRs to raise capital from global investors, which can be used for expansion, acquisitions, or other corporate purposes.
- GDRs also enable companies to enhance their visibility and access a wider investor base.
- Investors in GDRs are entitled to dividends and capital gains, similar to shareholders of the underlying company.
- GDRs carry currency risk, as they are denominated in a foreign currency. Fluctuations in exchange rates can affect the returns for investors.
- GDRs are subject to regulations and disclosure requirements of the stock exchange where they are listed, as well as the regulatory authorities in the home country of the issuing company.
In conclusion, GDRs (Global Depository Receipts) are financial instruments that allow investors to gain exposure to foreign companies' shares. They provide an avenue for diversification and allow companies to raise capital from global investors. However, investors should be aware of the associated risks, such as currency fluctuations.