Foreign companies are hardly raising capital on the US stock market. They have lost their taste for the American market due to the worsening market conditions and the fall of the dollar against the main world currencies.

According to Citigroup, the total amount of capital raised by foreign companies from American depositary receipt (ADR) sales and private placements since the beginning of the year was $9.3 billion. This data does not include the $3.5 billion initial public offering (IPO) of China Life Insurance, China's largest life insurance company, since it is unclear what portion of the shares (the IPO was conducted in Hong Kong) will be traded on the New York Stock Exchange as ADRs.

87% of the placements were provided by companies from Taiwan, where the state is currently reducing its presence in the financial sector, which encourages local companies to enter American stock exchanges. In general, the interest of foreign investors, primarily from Europe, Latin America and Asia, in the US markets is at its lowest level in the last 10 years. The French pharmaceutical company Flamel Technologies and the Irish biotech company Icon are the only ones in Western Europe to attract capital to the US. Of the Japanese companies, only Mitsubishi Tokyo Financial Group has done so. And of the Latin American companies, the Brazilian financial corporation Unibanco-Uniao de Bancos Brasileiros and the Chilean bank Corpbanca.

The lack of interest from foreign companies in the U.S. market is due to the poor global capital-raising environment this year. Companies worldwide have raised $50 billion through IPOs this year, the lowest since 1992, according to Thomson Financial. That's not surprising, given that stock markets have been falling for three years through March. That has made raising money through equity offerings unattractive, even as stock prices have risen since the spring.

European companies have been the least eager to enter the U.S. market. One reason for this is that the euro has risen 18 percent against the dollar since the start of the year. "Raising money in a currency that is constantly falling is like filling a sack with paper," says Joseph Kinlan, chief market strategist at Banc of America Capital Management. "Even if foreign companies wanted to list in the U.S., they would be better off doing so in their own markets."

Some European companies have turned to debt capital markets, given that interest rates are low. The effects of the Sarbanes-Oxley Act, which has complicated the procedure for registering both American and foreign companies on the stock exchange, have become apparent this year. However, representatives of foreign companies have become less dissatisfied after the US Securities and Exchange Commission promised in April to exempt them from many of the law's requirements. "I don't know of any companies that would refuse to enter the US market because of the Sarbanes-Oxley Act," says Kathleen McLaughlin, a partner at the New York law firm Allen & Overy. "People just don't do [share placement] deals anywhere." (WSJ, 16. 12. 2003, Mikhail Miroshnichenko)

The US market has become uninteresting