An ADR is a receipt issued by a US depositary bank against shares of a non-US company held in custody in their home market. The receipt trades in dollars on the NYSE or Nasdaq and settles like any domestic share.
It solves access and currency in one instrument. A US brokerage account is enough, dividends arrive converted into dollars, and the company files at least some information with the SEC. In exchange the price embeds the exchange rate: if the local shares rise three per cent while the currency falls four, the ADR falls.
Check the ratio and the sponsorship. One ADR may represent one share, a fraction of one, or several, so comparing the ADR price to the local price without adjusting invents a discount that does not exist. Unsponsored ADRs, created without the company’s involvement, carry thinner liquidity and weaker disclosure.