Foreign Markets Question
How could the indian market price of ICICI Bank be US $ 13 odd & the US ADR price @ US $ 31?
how could there be a spread of US $ 28?
Asked by Rollerballt in
Foreign Markets
6 months ago
Stocks referenced: IBN
Answers
2183 points
ChaosNantuko answered 6 months ago …
stock splits in the indian market may just mean 1 share of the ADR is equal to a different number of shares in the indian market. In this case, one share of the ADR is worth 2 shares of the indian stock.
So its 2 shares of ICICI worth 26
vs. its 1 share of the ADR worth 31
There's still a bit of a gap, and a potential arbitrage opportunity. If you have an account in both the usa and india, you could go short the ADR and long ICICI and if it converges, you'd make money.
