Citing increased overseas investor interest in Japanese markets and a declining number of ADRs, lingerie manufacturer Wacoal Holdings has become the third Japanese company in the last four weeks to move its DRs from a main US exchange to the over-the-counter (OTC) market.
Wacoal, a ¥171.9 bn ($1.7 bn) apparel conglomerate, has de-listed from NASDAQ OMX and begun trading instead on the OTCQX marketplace under the ticker WACLY. The company says it will no longer file annual reports with the SEC, but will disclose consolidated financial statements in English on its website ‘in accordance with US GAAP in order to enable investors to compare future results with past disclosure.’
Japan’s Panasonic and Makita also de-listed their ADRs from the NYSE and NASDAQ, respectively, in the last week of April, and are now trading on OTC Pink Sheets.
Executives from OTC Markets Group have traveled to Japan twice in the past six months to meet with Japanese company executives. They argue that Japanese companies can avoid the duplicative cost and regulatory burden of meeting two countries’ disclosure regimes, an OTCQX spokesperson says.
An equally likely incentive for Japanese companies to consider de-listing is the weakening Japanese yen, which has fallen more than 22 percent against the dollar since last fall, increasing the yen-denominated cost of US listing fees. The OTC markets boast more than 200 Japanese ADRs and make up the largest percentage (at 18 percent) of the OTCM ADR Index.
‘We see this as the tail-end’ of ADR de-listings, says Tom DiVivo, Asia-Pacific group manager for BNY Mellon’s DR business.
Starting in 2008, companies from developed markets with ADRs began de-listing from US exchanges to escape the regulatory burdens of SOX, as well as duplicative reporting requirements and expensive listing fees, DiVivo says. Japanese firms have been among the last to join the exodus, while companies from countries such as Australia and Singapore were early to de-list.
Now the trend may be reversing, DiVivo adds, pointing to a pending new listing of a Japanese ADR scheduled to hit the NYSE later this month.
