International Stock Markets

New issues of stock are sold in international markets for a variety of reasons. For example, a non-U.S. firm might sell an equity issue in the United States because it can tap a much larger source of capital than in its home country. Also a U.S. firm might tap a foreign market because it wants to create an equity market presence to accompany its operations in that country. Large multinational companies also occasionally issue new stock simultaneously in multiple countries. For example. Alcan Aluminum, a Canadian company, recently issued new stock in Canada. Europe, and the United States simultaneously, using different underwriting syndicates in each market.

In addition to new issues outstanding stocks of large multinational companies are increasingly being listed on multiple international exchanges. For example, Coca-Cola’s stock is traded on six stock exchanges in the United States. four stock exchanges in Switzerland and the Frankfurt stock exchange in Germany. Some foreign stocks are listed in the United States an example here is Royal Dutch Petroleum, which is listed on the NYSE. U.S. investors can also invest in foreign companies through American Depository Receipts (ADRs), which are certificates representing ownership of foreign stock held in trust. About 1,300 ADRs are now available in the United States, with most of them traded on the over the country (OTC) market. However more and more ADRs are being listed on the New York Stock Exchange, including Germany’s Daimler-Benz. England’s British Airways, Japan’s Honda Motors and Italy’s Fiat Group.