Last Week in Global IPOs: China Surge

 |  Includes: ACHI, FPX, GM, HCA, MDAS
by: Josef Schuster

With jitters over energy increasingly inflicting damage on developed markets momentum, the IPOX Global and IPOX Regional Indexes outperformed strongly last week, with key indexes benefiting from a big jump in China-related shares. Key U.S. large-cap IPOs lined up.


IPOX Indexes

  • On the back of a big surge in HK-traded Chinese stocks across industries and outperforming emerging markets, the IPOX Global Indexes surged last week. The broad IPOX-100 Global (IPGL100) rose +2.15%, beating key benchmarks MSCI World (MXWD) and S&P 500 (NYSEARCA:SPY) by +123 and +205 bps. Respectively, its biggest relative move this year. 64/100 companies in IPGL100 rose on the week, with the average (median) index member gaining +2.14% (+1.27%), in line with the liquidity-adjusted index.
  • In the United States, the IPOX-100 U.S. (NYSEARCA:FPX): +0.45% once more was able to shrug-off declines in hedge fund-heavy BSBR-like heavyweight General Motors (NYSE:GM): -2.59%. Big support looks now the upper range of its original book building range near USD 29.00. Health-care technology firms rose strongly with Accretive Health (AH) UN: +9.71% and MedAssets (NASDAQ:MDAS) US: +12.73% in focus. While the IPOX Europe Universe traded in line, focus amongst the IPOX Regional Indexes was on the IPOX-30 Asia-Pacific Index (IPTA: +3.41%) benefiting from a big week in Chinese consumer stocks and another solid performance amongst its key Japanese holdings Dai-Ichi Life (8750 JT: +6.84%), Aozora (8304 JT: +3.83%) and social networker Gree Inc. (3632 JT: +3.66%).
  • Amid a big comeback in recent Chinese Financials and Consumer IPOs and Latin American IPOs OGX (OGXP3 BS: +6.58) and Ecopetrol (EC UN: +3.42%), the IPOX China and IPOX Latin America Indexes are now trading at par with the benchmarks YTD.

Key IPO Debuts: (Week 02/28/2011)
Return over IPO
China 33 Media Group
8087 HK
Williams F1
Click to enlarge
  • Just 5 accessible IPOs launched last week, with the average (median) deal closing the week at a premium of +19.44% (-4.00%). Another 8 companies listed in mainland China, with the average (median) IPO gaining +14.72% (+4.13%), now in line with the long-run average (median) in accessible global markets. Using a sample of 573 China A-share IPOs since 01/2007, the Figure below underlines the increasing efficiency of the A share IPO market as median initial returns have dropped sharply.
Upcoming IPOs (Week: 03/07/2011)
CL Group
8098 HK
VC Broker
HCA Holdings
All Major
Intern. Meal
Banco Itau
Click to enlarge
  • Key U.S. IPO HCA (NYSE:HCA) is lined up. HCA is neither a dividend- nor growth stock and we note the continued underperformance of perceived “cheap” stocks amid large overhang (e.g.GM). We use 2010 South Africa IPO and hospital operator Life Health (LHC SJ) for HCA’s relative trajectory over the short- and mediun term and expect the deal to price near the bottom of the range.
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 may be long or short aforementioned companies.