IPOX Indexes Weekly Summary
· Amid slowing momentum and plunge in risk, the IPOX Indexes rise.
· IPOX China (CNI, IPXUCHCP) extends big YTD gains.
· Strong reception to key H.K. and U.S. IPOs.
Significant deal flow lining up.
IPOX Returns, Notable Company Moves:
IPOX Indexes extend gains, relative momentum slows: The IPOX Indexes remained buoyant during option expiration week but relative momentum slowed notably. With the VIX CBOE SPX Volatility Index (VIX) plunging another -6.74%, the IPOX Global 50 (IPGL50) - capturing USDbn 954 of global stock market cap of 50 large IPOs and Spin-offs - rose just +0.28% to +4.76% YTD, lagging benchmark MSCI World (MXWD) by -20 bps, its first negative relative return YTD. The lackluster showing was due to slowing momentum in the IPOX Regional Indexes with a focus on the IPOX U.S. (ETF: FPX) and IPOX Asia-Pacific (IPTA). In the IPOX U.S. , a reversal in refiners including IPOX heavyweight Phillips 66 (PSX US: +8.88%) and strength in dividend heavy hospital operator HCA Holdings (HCA UN: +11.30%) was mitigated by a big decline in some of the top holdings: For example, ahead of the placing of U.S. government shares and amid weak European car sales, U.S. car-maker General Motors (GM US: -3.56%) fell, while U.S. social networkers Facebook (FB US: -6.46%) plunged in the aftermath of a new product announcements. Notable is the strength in the IPOX Europe Universe (IPXUJPEU, IXTE) which traded well vs. the market as key holding Italian Fashion maker EUR 3bn Salvadore Ferragamo (SFRGF.OB MI: +9.90%) jumped on takeover speculation after Swiss Watch Group Swatch AG (SWGAY.PK VX: +5.63%) took potential IPO Harry Winston off the block in a USD 1bn deal. IPOX Emerging Markets recorded big cross-sectional moves on volatility in bank stocks after a change in analyst ranking: While recent IPO Santander Mexico (GFRSF.OB UN: -4.87%) declined sharply on a downward revision, 2010 IPO Chongquing Rural Commercial Bank (3618 HK: +16.51%) rose to a post-IPO high on a series of upgrades and contributing notably to another week of big gains in the IPOX China universe, with the IPOX China 20 (CNI) locking in a gain of +1.99% to +7.49% YTD. In the broader universe of China IPOs and Spin-Off (IPXUCHCP), medical equipment maker 06/10 IPO Trauson (325 HK: +40.50%) jumped for another week on a takeover offer, reaching a post-IPO high of HKD 7.25. The stock had traded as low as HKD 1.58 in 12/11.
|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
· Notable IPOX Indexes Movers:
|IPOX Index||Name||Size||Change (%)||Ticker|
|CNI||Chongquing Rural||Mid||+16.51||3618 HK|
|IPGL50||HCA Holdings||Large||+11.30||HCA UN|
|IPXUJPEU||Salv. Ferragamo||Mid||+9.90||SFER MI|
|IPGL50||Phillips 66||Large||+8.88||PSX UN|
|IPGL50||Cobalt International||Large||-7.95||CIE UN|
|IPGL50||Santander Mexico||Large||-4.87||BSMX UN|
|IPXUJPEU||African Barrick||Mid||-4.81||ABG LN|
|IPGL50||General Motors||Large||-3.56||GM UN|
· Significant IPOs Traded (Week: 01/14/2013):
|USA Compression Partners||USAC US||-2.78|
|Speedy Global Holdings||540 HK||+40.25|
|Golden Wheel Tiandi Holdings||1232 HK||+20.83|
|CVR Refining LP||CVRR US||+0.20|
|Norwegian Cruise Line Holdings||NCLH US||+30.47|
|SunCoke Energy Partners||SXCP US||-3.95|
6 notable IPOs commenced trading last week with the average (median) IPO gaining +14.17% (+10.52%). Non-U.S. MLP related offerings of common stock (540 HK, 1232 HK, NCLH US) performed spectacularly across Asia and the U.S., displaying an initial return of +30.52% (+30.47%) based on the final offering price on the week.
· Upcoming global IPOs/Others:
|Zoetis Inc.||ZTS US||01/31||Pfizer (PFE) Spin-Off|
|Chinalco Mining||3668 HK||01/24||Chinalco Alu. Spin-Off|
|China Vanke Co.||200002 CH||TBD||B to H Shares Conv.|
Amid big flows into global equities, we expect the indiscriminary demand for IPOs and Spin-Offs to drive positive initial pricing sentiment, which should bode well for the large deals set to commence trading during the last week in January, including U.S. traded Pfizer (PFE US) spin-off Zoetis Inc. (ZOET US) and Alumininum Corp. of China (2600 HK) spin-off Chinalco Mining (3668 HK). We see notable opportunities in the slew of B-shares co's seeking to convert into H-shares, such as China Vanke (200002 CH), Chinas largest real estate developer.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.