Jefferson Smurfit shares have had a tough time in the past few weeks, with the share falling back from €2.96 to €2.64 as sentiment towards cyclical stocks turned sour once again and interest rate fears took hold.

But one initiative that the group has taken should at least improve the liquidity of the shares on the New York market where they trade in the form of American Depositary Receipts, with one ADR representing 10 ordinary shares on the Irish market.

In effect, US investors have traditionally been reluctant to take on a large Smurfit exposure for fear that the lack of liquidity of the ADRs would leave them too much of a stock-specific risk if the market turned downwards or if the dollar/euro rate shifted negatively.

In July, Smurfit began a series of initiatives with an ADR specialist on the New York Stock Exchange to boost liquidity - a move that has seen average daily turnover in Smurfit ADRs increase by 50 per cent to 36,000, equivalent to 360,000 ordinary shares. This is strong growth in ADR liquidity, but turnover in Smurfit equity is still heavily dominated by the ordinary shares where daily turnover in Dublin and London jumped from three million to 4.5 million shares in the same period.

Smurfit now has an agreement with its US depositary bank Morgan Guaranty that will allow US holders of Smurfit ordinary shares to convert into ADRs without the usual 5 cents per ADR issuance fee as long as they do so before the end of November.

Switching into ADRs is attractive for US holders of the Smurfit ordinary shares. The ADRs - being denominated in dollars - do not leave US holders exposed to a foreign exchange risk while dividends are also paid in dollars and are not subject to Irish withholding tax.

For Smurfit, the more shares that are switched into ADRs, the more liquid those ADRs will be and hopefully more attractive to the US institutions that Smurfit is trying to attract. The aim apparently is to have the ADRs in New York as liquid as the ordinary shares on the Dublin and London markets.

US assets account for about half of Smurfit's operating assets and the group's aim is to increase the US presence on the share register to more than 50 per cent to match the American proportion of assets.

In the past four years, US shareholders in Smurfit have risen from 10 per cent to 34 per cent and it will require buying of another 170 million shares to bring the US component on the register over 50 per cent. In cash terms, that will require US buying of well in excess of €400 million worth of Smurfit stock.

In that same four-year period, the proportion of British holders has risen from 8 to 10 per cent, Europeans from zero to 2 per cent, while Irish institutions have fallen from a very dominant 58 per cent to 32 per cent. The move to make ADRs more attractive should boost the US representation on the share register.