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Summary:

During a mostly lackluster week for the broad global equity benchmarks, the IPOX Indexes benefited most from end-of-quarter effects, finishing with strong gains across the board. Confounding trends in initial pricing action during last week. Another busy week ahead for global IPOs.

Highlights:

IPOX Global Indexes:

  • With U.S. and European equity benchmarks trading lackluster throughout the week, the IPOX Indexes extended the strong run with another week of big absolute and relative gains, benefiting most from Q3-2010 end effects.
  • The key IPOX-100 Global Index (IPGL100) rose +2.19%, outperforming benchmarks S&P 500 (SPX) and MSCI AC-World (MXWD) by a massive +230 bps. and +168 bps. at constant levels of risk.
  • 73/100 companies in IPGL100 rose on the week, with the average (median) equally-weighted constituent gaining +1.97% (+1.57%), less than the applied market cap-weighted and liquidity-adjusted benchmark.
  • In IPOX Global Sectors, IPOX Global Energy (+5.37%) rose most on a big jump in EUR 15.5bn Portuguese Integrated Oil company and IPOX heavyweight Galp Energy (+12.12%). Stocks in the IPOX Global Consumer Discretionary Sector (+2.74%) had another strong week, after yet another round of heavy buying in HK-traded and China-linked consumer stocks.
  • Momentum in IPOX Global towards Q3-end was underpinned by strong outperformance of the regional IPOX Indexes, with the IPOX U.S., Europe and Asia-Pacific universe doing exceptionally well at the same time:

IPOX Regional Indexes:

  • The large-cap centric IPOX U.S. universe rose in line with the small-cap centric Russell 2000 (RUT), adding +1.28% to 6.05% YTD. Notable is the explosion in trading volume in the associated IPOX-100 U.S. linked ETF Tracker Fund (Ticker: FPX), as position and spread traders look to capture the positive asset allocation properties of FPX.
  • Notable is the rise in the IPOX Europe universe trading insulated from the strength in the EUR, which increasingly pressures the main European benchmarks: The IPOX-30 Europe Index (IXTE) gained +0.20% as recent IPO Amadeus IT Holdings (+4.23%) rose anew, for example.
  • Most regional focus on the week remains on the surge in the IPOX-30 Asia–Pacific Index (IPTA), which extended the YTD gain by +1.51% to +15.85%. While IPOX heavyweight and YTD’s worst global large-cap IPO Dai-Ichi Life (-2.80%) continued to decline, China-linked Consumer Discretionary stocks such as cosmetics group L’Occitaine (+9.38%) or casino operator Sands China (+8.82%) continued to trade at new highs. Notable is Thursdays 3:1 stock split in IPOX pick Gree Inc. (3632 JP), JP traded incumbent to U.S. social networking IPOs.
Initial Action in global IPOs - Confounding Trends:
Table 1: Key Global IPO Pricings (last week)
Company
Ticker
Return over IPO
Amyris Inc.
AMRS US
+7.69%
Country Style Cooking
CCSC US
+76.06%
Fila Korea Ltd
081660 KS
+124.57%
Besunyen Holdings
926 HK
+18.59%
Boshiwa International
1698 HK
+50.20%
China Ming Yang
MY US
-5.36%
Chinacache
CCIH US
+95.32%
Elster Group
ELT US
+8.85%
Liberty Mutual Agency
LMAC US
postponed
Keyw Holding Corp
KEYW US
+13.80%

  • Last week’s initial pricing action in global IPOs provides strong evidence re: the diverging/confounding trends in equities in general, and IPOs in particular: While the average (median) equally-weighted global IPO finished with a near-record gain of +43.30% (+18.59%) above the final offering price, the key large-cap (insurance) deal of the week (Liberty Mutual) was postponed on demand.
  • China Tech/Consumer Discretionary-related (small-cap) IPOs performed spectacularly, with highly oversubscribed Country Style Cooking (+76.06%), Fila Korea (+124.57%) and Chinaccache (+95.32%) underlying the current power of indiscriminate buying of industry-specific IPOs by positive momentum feed-back traders and speculators.
Upcoming global IPOs – More deals line up – HK focus:
Table 2: Global IPO Deal Flow expected (week)
Company
Ticker
Trading Day
Ford Glory Group
1682 HK
05/10/2010
Daqo New Energy Corp
DQ US
06/10/2010
Harum Energy Tbk PT
3169357Z IJ
06/10/2010
LINC Logistics Co
LLGX US
06/10/2010
SITC International
1308 HK
06/10/2010
Global Education & Tec
GEDU US
07/10/2010
Indofood CBP Sukses
ICBP IJ
07/10/2010
Sunac China Holdings
1918 HK
07/10/2010
Trony Solar Holdings
2468 HK
07/10/2010
Xinjiang Goldwind
2208 HK
08/10/2010
  • With mainland China closed, expect strengths in the two Indonesian IPOs, while the respective HK (alternative) energy IPOs may provide for less upside. We note the IPO of LINC Logistics as a diversified stand-out from the otherwise all (highly risky) China-related U.S. deal flow.

Disclosure: The IPOX Indexes may be long or short respective stocks mentioned.

Source: This Week in Global IPOs - Confounding Trends Set to Continue