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Technology Stocks : Softbank Group Corp
SFTBY 55.64-0.8%Dec 23 3:59 PM EST
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To: badon518 who wrote (4642)3/28/2000 8:31:00 PM
From: Edwin S. Fujinaka  Read Replies (2) of 6020
 
I don't believe that ADRs have to track their parent company's stock in any exact fashion. They usually track pretty closely though. A problem could develop with the trading limits. Today, for example, Softbank gained over 20% or $155 up to $900/share here in the US. Softbank , 9984, in Japan is limited to around a 5% swing. These are not ADRs, but are the exact same shares that are traded in Tokyo. The Softbank stock traded in Europe sometimes deviates from the per share price for either American OTC traded Softbank or 9984, the Tokyo traded Softbank. The European stock is said to be non "fungible" with either the American or Tokyo traded Softbank shares. I was told by a Schwab Global Broker that they have requested permission to buy the European version of Softbank at times, but Schwab management nixed the idea.

The funny thing is that I have owned Japanese ADRs since the '60s, but I never thought about the geographic difference in share prices much. It was hard to even track the Japanese prices, and I think it was not possible to trade the Japanese shares here in the US. At least it wasn't easy.

BTW, an ADR (American Depository Receipt) is actually a certificate issued by an American Company (like Morgan Guarenty Trust for example) where the ADR is backed by Japanese shares held by the American issuing company. The ADR can represent any number of Japanese shares so that the ADR can be priced conveniently.
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