Last Week In Global IPOs: Despite Facebook, IPOX U.S. Gains On U.S. Benchmarks

by: Josef Schuster


· The IPOX Strategies finish mixed, IPOX China and IPOX U.S. extend relative gains, YTD gains in U.S. benchmarks melt away.

· IPOX heavyweight social networker Facebook (NASDAQ:FB) reverses course, closes below pre-earnings level.

Global small-caps lined up for trading debut.

IPOX Returns, IPOs Priced and Upcoming:

· IPOX Strategies trade mixed, IPOX China and IPOX U.S. extend relative gains. Renewed profit taking in all global markets on U.S. Fiscal cliff fears after the U.S. elections pressured the IPOX Strategies across the board last week. Continued relative weakness of the NASADQ-100 (NDX) weighted. On the global level, the IPOX Global 50 (IPGL50) fell -2.57% to +15.60% YTD, underperforming benchmark MSCI World (MXWD) by -41 bps. Relative weakness was driven by profit taking in some of the top holdings, including Asia-Pacific Insurance Group AIA Group (NYSEARCA:AIA), the HK-traded Macau casino operators Wynn Macau (OTCPK:WYNMF) and Sands China (1928 HK: -5.64%). As more lock-ups of secondary shares near, U.S. social networker Facebook slumped to pre-earnings levels. In the cross-section of the IPOX Strategies universe, the IPOX U.S. (IPXO, IPXT) and IPOX China (CNI, IPXUCHCP) continued to outperform. For example, the IPOX U.S. 30 (IPXT), which tracks the performance of the largest, best performing and most liquid U.S. IPOs and spin-offs over the past four years, fell just -1.99% to +17.26%, extending the relative YTD gains vs. the S&P 500 (SPX), Russell 2000 (RUT) or NASDAQ 100 (NDX) by +44 bps to +754 bps (SPX), +39 to +996 bps. (RUT) or +72 to +381 bps. (NDX). A big week in U.S. hospital operator dividend-heavy IPOX heavyweight HCA Holdings (NYSE:HCA) helped to mitigate the impact of a slump in aforementioned Facebook . S&P 500 (SPX) inclusion candidate U.S. carmaker General Motors (NYSE:GM) fell more than the benchmarks, after hitting a 12-month high on U.S. Election Day. The IPOX Europe universe (IXTE, IPXUJPEU) fell more than the benchmarks on renewed weakness in European Financials, including embattled Spanish Financial Bankia (BKIA SM: -12.50%). In IPOX Emerging Markets, we note the continued strong relative momentum in the IPOX China (CNI) which gained versus benchmark HSCEI Enterprise (HSCEI) for a third straight week. In U.S.-traded recent China IPOs, new post-IPO highs in online brand-name discount retailer VIP Shop (NYSE:VIPS) are substantially improving the pricing outlook for social networker and Citi/DB-led YY Inc. (NASDAQ:YY) scheduled for the following week. Relative performance in the IPOX Asia-Pacific Index (IPTA) declined last week on broad weakness amongst Asia-Pacific Large- and mid-caps.

· IPOX Strategy Returns YTD 2012:

Ticker (BBG/Reuters) Week Q3 12 YTD 12
IPOX Global 50 (IPGL50) (USD) -2.57% +7.31% +15.60%
MSCI World (MXWD) -2.16% +6.24% +7.93%
IPOX U.S. 100 (IPXO) -2.29% +7.09% +18.01%
IPOX U.S. 30 (IPXT) -1.99% +5.39% +17.26%
S&P 500 (SPX) -2.43% +5.76% +9.72%
IPOX Europe50 (IPXUJPEU) (EUR) -2.32% +11.75% +4.54%
IPOX Europe30 (IXTE) (EUR) -2.40% +11.76% -0.20%
STOXX 50 (SX5P) (EUR) -1.56% +5.76% +6.42%
IPOX Asia-Pacific 30 (IPTA) -2.83% +6.82% +24.85%
MSCI Asia-Pacific (MXPC) -1.08% +2.56% +3.79%
IPOX China 20 -2.37% -1.96% +6.46%
IPOX China Cp. (IPXUCHCP) -2.33% +3.18% +9.29%
Hang Seng Enprs. (HSCEI) -3.50% +2.68% +5.22%
Why choose IPOX to close the IPO/spin-off asset allocation gap?
§ Proven: Real-time performance over market cycles

§ Scalable and Stable: Clearly defined Philosophy

§ Patented: Portfolio Construction Technology

§ Best in Practice: Investment Management Mandates

· Significant IPOs launched (Week: 11/05/2012):

Company Ticker Return/IPO
Avatec Co Ltd 149950 KS 117.46%
Baramulti Suksessarana Tbk PT BSSR IJ -1.03%
CJ Hellovision Co Ltd 037560 KS -3.13%
OFS Capital Corp OFS US -8.80%

Just 4 notable global IPOs prices last week with the average (median) IPO rising (falling) by +26.13% (-2.08%). While select U.S. IPOs were cancelled, the IPO of Korean-domiciled CJ Hellovision (037560 KS), the largest IPO on the Korean market in 18 months, disappointed. We note another week of no pricing and trading activity in mainland China A Share IPOs.

· Upcoming global IPOs (Week: 11/12/2012):

Company Code Date Lead
Adi Sarana Armada ASSA IJ 11/12 BAHANA
Moa Group Ltd MOA NZ 11/13 ABNC, FBARR
Silvercrest AM Inc. SAMG US 11/13 Raymond James
Peach Property Group 1PEG GR 11/14 biw
Careerlink Co Ltd 6070 JP 11/15 Nomura
Cemex Latam Holdings CLH CB 11/15/ BAML
Ruckus Wireless Inc RKUS US 11/15 GS, MS

In light of increasing downside volatility and a further reversal of the multi-year relative strength in the NASDAQ-100 (NDX), a number of small-cap are lined up for trading debut in the global regions. Amongst the notable deals in the U.S. is Goldman Sachs/Morgan-Stanley-led Ruckus Wireless (RKUS US), a designer and manufacturer of wireless equipment. With the prime purpose of the IPO to create a public market for its stock, the company seeks to raise ca. USD 126m for around 11.40% of the company, valuing the strongly growing company at around 10times 2011 revenues. Given the strong momentum for IPOs in specialty industries, we expect a good reception to this deal.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.