Last Week in Global IPOs: IPOX Indexes Trading Higher, U.S. IPOs Outperforming Hong Kong

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 |  Includes: AL, FPX, MKTG, SGNT, TLLP, VNET
by: Josef Schuster

Summary:

The IPOX Indexes continued to trade higher last week, as initial weakness in global equities was met by big short covering after strong U.S. earnings and encouraging economic numbers. IPOs in the U.S. remained in focus, once again significantly outperforming the Hong Kong counterpart initially.

IPOX Indexes Highlights:

  • The IPOX Global Indexes finished the shortened trading week with strong gains, benefiting from big moves in some of its large-cap constituents on strong earnings and momentum. The IPOX Global 30 Index (IPGL30), performance yardstick for the largest and most liquid global IPOs issued during the past 1000 trading days, gained +2.17% to +8.75% YTD, continuing to outperform benchmarks MSCI World (MXWD) and S&P 500 (SPX).
  • 65/100 companies in the broader IPOX Global 100 Index (IPGL100) rose, with the average (median) equally-weighted constituent gaining +1.60% (+1.47%).
  • Focus in individual markets remained on the IPOX Asia-Pacific universe, with the IPOX Asia-Pacific 30 Index (IPTA) extending the YTD gains by +2.81% to +14.87% YTD on strong momentum in the red-hot Macau casino stocks Wynn Macau (1128 HK: +4.10%), Sands China (1928 HK: +7.42%) and Asian insurer AIA Group (1299 HK: +6.89%). We note new highs in Japan-traded social networker Gree Inc. (3632 JP: +9.63%), incumbent to the upcoming cluster of U.S. social networking IPOs.
  • With the IPOX Europe universe (IXTE: +0.59%) underperforming for the second week in a row, the IPOX-100 U.S. Index (IPXO: +1.94%) lagged the Russell 2000 (RUT: +2.20%) and Nasdaq 100 Index (+2.86%) on significant weakness in recent IPOs, such as DemandMedia (DMD: -21.41%).

Key IPOX Indexes and Index Returns YTD:

Key IPOX Indexes

Return

Week (%)

2011 Return YTD (%)

+/- Benchmark YTD

IPGLC (USD)

+1.39%

+7.71%

IPGL100 (USD)

+2.09%

+7.55%

IPGL50 (USD)

+2.07%

+7.40%

IPGL30 (USD)

+2.17%

+8.75%

Significant +

WTD (EUR)

+1.47%

+0.58%

IPXO (USD)

+1.94%

+9.58%

Significant +

IPXT (USD)

+1.97%

+8.80%

Significant +

IXTE (EUR)

+0.59%

+5.80%

Significant +

IPXUJPEU (EUR)

+0.61%

+5.56%

Significant +

IPTA (USD)

+2.81%

+14.87%

Significant +

IPXUAPUS (USD)

+1.93%

+16.52%

Significant +

IPXUEM (USD)

+1.58%

+4.37%

IPXUBRIC (USD)

-0.04%

+1.90%

IPXUCHCP (USD)

+1.40%

+10.42%

Significant +

CNI (USD)

+0.62%

+10.47%

Significant +

IPXUCHAP (USD)

-1.11%

+3.00%

IPXUCAUP (USD)

-2.07%

+2.59%

Significant -

IPXULATM (USD)

+2.31%

-1.26%

IPXULATT (USD)

+1.97%

-0.74%

Click to enlarge

IPOX-linked products: Asset allocation Properties:

Comparative performance of IPOX-linked products

Ticker

1-year p.a.

Beta

Corr vs. SPY

Corr vs. DXIIX

DXIIX

+12.22%

+0.19

-0.36

+1.00

JPMNX

-1.67%

+0.39

+0.41

-0.21

SPY

+13.07%

+1.00

+1.00

-0.36

FPX

+18.85%

+0.96

+0.86

-0.28

Click to enlarge
  • IPOX-linked funds have continued to display attractive asset allocation properties: 1) The First Trust U.S. IPO Fund (NYSEARCA:FPX) - linked to the IPOX U.S. 100 Index (IPXO) - reached a new all time high and extended its YTD gain to +9.65%, +280 bps. more than benchmark S&P 500 (SPX). The fund was recently assigned four stars by Morningstar for its five-year actual performance record. 2) The Direxion Global Long/Short IPO Fund (DXIIX) records an annualized return of +12.22% at a beta on +0.19 and trades at a negative correlation to the long-only benchmarks, therefore underlying the asset allocation potential of the global IPO opportunity set.

Key IPO Debuts: (Week 04/18/2011):

Company

Ticker

Return over IPO (%)

Air Lease Corp

(NYSE:AL) US

9.62%

NOMOS-BANK

NMOS LI

0.57%

Sagent Pharmaceuticals

(NASDAQ:SGNT) US

25.63%

Tang Palace China

1181 HK

57.58%

Tesoro Logistics LP

(NYSE:TLLP) US

11.95%

21Vianet Group Inc

(NASDAQ:VNET) US

25.33%

China NT Pharma

1011 HK

-16.30%

Responsys Inc

(NASDAQ:MKTG) US

28.33%

Hilong Holding Ltd

1623 HK

5.00%

Click to enlarge
  • 20 global IPOs priced last with the average (median) IPO gaining +14.80% (+9.81%) based on the final offering price on the week. While all U.S. IPOs rose solidly, with most upside in speculative China 21Vianet Group (VNET US: +25.33%) and software firm Responsys (MKTG US: +28.33%), the key Hong Kong deals (China NT Pharma and Hilong Holding) debuted mixed.
  • 5 China A Share IPOs debuted last week. Initial IPO sentiment continued to deteriorate with the average (median) equally-weighted IPO losing -2.31% (-4.27%).

Upcoming IPOs: (Week: 04/25/2011)

Company

Ticker

Day

Lead

Focus Lumber

FLB MK

28/04

Bank Islam

Sevan Drilling AS

SEVDR NO

29/04

PARETO

Click to enlarge
  • Seasonally-related, global IPO issuing activity is at a virtual standstill for the remainder of the month. We do not expect significant upside for Norway’s Sevan Drillilng AS, (SEVDR NO) the largest dealing for the week.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The IPOX Indexes and/or respective IPOX-linked investment product may be long or short aforementioned companies.