Need proof that the world -- the financial world -- is getting flatter? Then you might look to recent American depositary receipt delistings, such as the one that cement giant Lafarge
On the heels of snazzy-looking operating results (earnings up 70% over the first half of last year), Lafarge announced that it would no longer keep its ADRs, because trade in these shares typically amounts to a paltry 1% of its total volume.
As my colleague Nate Parmelee noted in last month's edition of Motley Fool Global Gains, the costs of keeping an ADR in compliance with U.S. securities regulations has become increasingly annoying to some foreign companies, even giants like Lafarge -- which goes toe-to-toe with Global Gains-recommended Cemex
As a result, when stateside volumes are too thin, it's no longer worth a company's while to go through the motions. Since there's plenty of liquidity and capital available to Lafarge through local listings in Europe, it pulled the plug. It follows a company I owned, Ducati, in making this move. Other, much larger companies throwing aside their stateside listings recently include chemical giants Akzo Nobel, BASF
While many of these firms continue with an over-the-counter-listed "level 1" ADR, there's no doubt that the lack of a full ADR makes investing a bit trickier for international stock buffs like those of us at Global Gains. However painful these moves might be in the short term, the fact that companies need not rely on U.S. markets looks like a good thing to me. It speaks to the increasing ease with which capital can move across borders, and as the world becomes ever flatter, that will mean greater investing opportunities for all of us.
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At the time of publication, Seth Jayson, a top-10 Motley Fool CAPS player, had no shares of any company mentioned here. See his latest CAPS blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.
