The Week in Global IPOs: Initial Returns in Mainland China IPOs Go Negative

Global stocks rose anew, as a good start to the U.S. earnings season and lack of investment alternatives continued to propel the main U.S. indexes amid lackluster volume. With IPO activity continuing to surge, the average equally-weighted new listing in mainland China closed the week in negative territory.

IPOX Indexes: Focus IPOX Asia-Pacific (Developed)

• Ahead of option expiration, the IPOX Global Indexes rallied, with the IPOX Global 30 (All Markets) Index (IPGL30) - global IPO performance benchmark for the largest and most liquid global IPOs and spin-offs over the past four years - rising +1.55%. That is slightly underperforming benchmarks S&P 500 (SPX) and MSCI World (MXWD).

• 54/100 companies in the broad IPOX Global 100 Index (IPGL100) rose, with the average (median) equally-weighted constituent gaining just +0.68% (+0.38%), substantially underperforming the benchmarks. Amongst individual companies, we note the big jump in IPOX constituent and London-traded Russian Mail.ru (MAIL LI: +15.89%), currently the only stock-market traded vehicle to gain access to the pre-IPO dynamics of Facebook.

• Upside focus amongst the IPOX Regional Indexes remained on the IPOX Asia-Pacific (Developed) (IPTA) universe, which traded firm versus benchmarks for the first half of the week on strength in the Macau-domiciled casinos with Melco Crown (MPEL UQ: +8.15%) and SJM Holdings (SJMHF.PK: +7.74%) in focus. The underperformance of the IPOX U.S. universe versus all leading benchmarks calls for some caution ahead: The U.S. universe traded relatively lackluster on weakness in General Motors (GM: -2.00%) or ever volatility rare earth producer Molycorp (MCP: -15.20%). Tobacco stocks displaying strong weakness during the previous week such as Philip Morris (PM: +0.44%) or Lorillard (LO: -0.28%) continued to disappoint in the New Year.

Initial IPO action: Mainland China marks negative week

Table 2: Selected Global IPOs (priced)

Company	Ticker	Return over IPO
Jiangsu Xiuqiang	300160 CH	-9.77%
Ledman Opto	300162 CH	5.26%
Ningbo Xianfeng	300163 CH	-3.31%
Sinovel Wind Group	601558 CH	-16.89%
Tong Oil Tools Co Ltd	300164 CH	-0.20%
Wuhan Huazhong	300161 CH	16.73%
Henan Province Xixia	002536 CH	-8.03%
Linzhou Heavy	002535 CH	0.80%
Hangzhou Boiler	002534 CH	1.62%
Qingdao Haili Metal	002537 CH	-13.80%
Sumpo Food Holdings	1089 HK	2.94%
Newtree Group	1323 HK	-10.26%
KEE Holdings Co Ltd	2011 HK	8.27%

• 24 global IPOs priced last week, with the average (median) equally-weighted IPO gaining just +10.18% (+2.18%), substantially less than the historical average.

• While IPO activity in mainland China continued to surge with 10 IPOs coming to market, the average (median) equally-weighted IPO closed the week notably with a loss of -2.76% (-1.75%), the first time in a year.

• The biggest opening loss of the week belonged to China's largest wind turbine maker Sinovel Wind Group (601558 CH: -16.89%). With the HSI Index displaying superior performance YTD, the three respective H.K. micro/small-cap IPOs debuted mixed.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: The IPOX Indexes or a respective investable product may be long or short an aforementioned company.