Example: Tencent Holdings Ltd.

KYG875721634 (Hongkong) in HKD

US88032Q1094 (OTC) in USD

An important factor of my stock picking is the market capitalization. Both listings have a similar (but not identical) number of stocks in my datasource. This might just be a problem in the database of my data provider and the number of stocks is actually the same for both listings. But it might also be a different type of stock. How would I know? If I disregards the OTC listing, I might apply to little weight to the stock.

From looking at this example I am quite sure that I must disregard the OTC listing, otherwise the total market capitalization of Tencent is incorrectly too high. I just don't know how to programmatically decide what the correct capitalization is.

  • 1
    $\begingroup$ Try to remove market capitalization from your question - it's irrelevant. A company can have several listed stocks, e.g. share classes. Each will have its own ISIN. $\endgroup$
    – LazyCat
    Jul 31 '18 at 20:30
  • 1
    $\begingroup$ ISIN is unique for a security. US88032Q1094 is the American ADR depositaryreceipts.citi.com/adr/guides/… , the other is presumably the main listing. An ADR does not add to market capitalization, the original shares are on deposit at a bank. Generally the capitalization of a company refers to the capitalization of the main shares (excluding ADRs) in this case the Honk Kong shares. $\endgroup$
    – Alex C
    Jul 31 '18 at 20:38

Not really.

The ISIN identifies a financial instrument, regardless of the market on which it is traded. The same company can issue several financial instruments (e.g. equity, bonds, etc.). In particular, the same company can often issue several classes of equity.

Note, also, that an ISIN could be a* depository receipt *for another equity (to keep things simple, it is a new financial instrument that serves as a proxy for another market); it seeems that US88032Q1094 is indeed an American Depositary Receipt (ADR) for Tencent Ltd, which is a HK company.

So if you want to avoid a deduplication, you should exclude the Depositary Receipts.

Note, however, that the only rational way of getting the total market capitalization of a company if you have an ISIN, is to get that information at the level of the company that issued the equity (issuer). That should be an easily obtainable piece of information from your provider. The issuer is an attribute of the financial instrument, so that gives you the link.

Companies should be identified with a global code called LEI (Legal Entity Identifier). If your data provider gives the LEI of the issuer of your equity security, that would be useful. Otherwise you will have to go along with whatever identifier your provider gives for the issuer.

But in any case, you should go, if you can, from the instrument to the issuer and then find the market capitalization as an attribute of the issuer.

  • $\begingroup$ I can easily filter out "OTC Markets". Good info about the LEI, it is not in my datasource but I think there are ways I could utilize it. $\endgroup$
    – TvdH
    Aug 1 '18 at 15:39

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