Summary:
The IPOX Indexes followed the key benchmarks higher post F&O expiration week, as supportive global economic numbers and bidding activity in selective industries continue to support. With IPO deal flow strengthening and positive feed-back strategies in place, global IPO activity picked up and deals across the board displayed strong initial performance.
IPOX Indexes Action:
- The IPOX Indexes rose across the board last week, following the key benchmarks higher, as U.S. stocks were propelled by strong asset allocation buying motivated by supportive FED action and continued take-over activity/talk in technology and materials.
- The IPOX Global 100 Index (IPGL100) added +1.63%, slightly underperforming benchmarks S&P 500 (SPX: +2.05%) and MSCI AC-World (MXWD: +2.24%).
- In the IPOX Regional Indexes, most upside action remained in the IPOX-100 U.S. Index (ETF Tracker Fund Index: FPX) and IPOX-30 Asia-Pacific (IPTA) Index:
- Exposure to U.S. tech-takeover fever: The IPOX-100 U.S. Index (ETF Tracker Fund Ticker: FPX) rose +2.61% to +5.09% YTD. Outperformance continued to be driven by respective corporate action/takeover activity in U.S. IPOs trading within the past 1000 trading days: After the definite takeover of IPOX members such as 3PAR (PAR), Arcsight (ARST) or Riskmetrics (RISK), U.S. tech takeover fever last week continued to favor IPOX members Netsuite (N), Rackspace (RAX) or Aruba Networks (ARUN), while spreading to some larger-cap IPOX constituents such as Teradata (TDC). Notable are continued low relative levels of IPOX index volatility.
- The Power of diversified exposure to (Developed) Asia-Pacific Consumer Trends: The IPOX-30 Asia Pacific Index (IPTA) displayed yet another week of solid absolute and relative returns, rising +1.50% to +14.16% YTD, continuing to outperform the respective benchmarks. Notable is the ascend of IPOX member, French cosmetics group and 05/2010 H.K. IPO L’Occitaine (973 HK), which rose to a new post-IPO high.
Initial Action in global IPOs:
Table 1: Key Global IPO Pricings (last week)
Company | Ticker | Return over IPO |
Changfeng Axle China | 1039 HK | +12.50% |
Magic Holdings Int. Ltd | 1633 HK | +36.67% |
Microport Scientific | 853 HK | +35.90% |
SciQuest Inc | SQI US | +29.16% |
- With the Chinese A-Share IPO market being on holiday, focus shifted to selected small/mid-cap pricings in H.K. and the U.S. The three H.K.-listed IPOs followed the strong performance of recent Korean IPOs and U.S. listing Soufun (SFUN): Having priced at or near the top of the respective range, the companies all finished the trading week with strong initial returns. Having priced at the bottom of the initial range, U.S. IPO SciQuest (SQI) stunned by opening above its initial range while closing markedly higher, providing yet more evidence about the increased and more indiscriminate risk appetite for global IPOs across market-cap thresholds.
Upcoming global IPOs:
Table 2: Global IPO Deal Flow expected (week)
Company | Ticker | Trading Day |
Amyris Inc. | AMRS US | 09/28/2010 |
Country Style Cooking | CCSC US | 09/29/2010 |
Fila Korea Ltd | 081660 KS | 09/29/2010 |
Besunyen Holdings Co. | 926 HK | 09/29/2010 |
Boshiwa International | 1698 HK | 09/30/2010 |
China Ming Yang Wind | MY US | 09/30/2010 |
Chinacache International | CCIH US | 09/30/2010 |
Elster Group | ELT US | 09/30/2010 |
Liberty Mutual Agency | LMAC US | 09/30/2010 |
Keyw Holding Corp | KEYW US | 09/30/2010 |
- With the new IPO issuing cycle getting in full swing, a large number of global IPOs across market-cap thresholds are lined up. With the initial reception to deals during the past three weeks positive, we expect further strong immediate upside for the average deal, as positive feed-back strategies look to include more indiscriminate initial IPO participation.
U.S. focus is on mid/large cap Liberty Mutual Agency (LMAC) - an insurance company - and Country Style Cooking (CCSC). While LMAC may suffer from some "global insurance IPO overhang", CCSC has already raised its initial range, providing support for indiscriminate IPO buyers entering the marketplace.
Disclosure: The IPOX Indexes may be long or short respective companies mentioned.
