Summary
Weakness in the key emerging markets spread to the developed markets last week, with small-cap benchmarks recording substantial losses and IPOX showing resilience across the board. Amid increasing risk and Asian weakness, IPOs in the United States debuted mixed. IPOX Indexes Performance
- The IPOX Global Indexes fell last week, following weakness in emerging and developed markets and a general increase in global risk.
- The IPOX Global 30 Index, measuring the “going public" effect of the 30 largest and most liquid global IPOs issued over the past 1,000 trading days, fell 1.16%, significantly outperforming the global benchmarks.
- 68/100 companies in the IPOX Global 100 Index declined, with the average (median) equally-weighted constituent shedding 1.76% (-1.29%). Weakness was concentrated amongst the heavy-hit energy and mining stocks with Batistas OGX, silver miner Fresnillo (FNLF.PK) and Concho Resources (CXO) leading the way.
- The IPOX Sub-Indexes declined in line with the benchmarks, with indexes skewed towards exposure to mega- and large-cap stocks less susceptible to the big declines in select small-caps in the Russell 2000. For example, the narrower IPOX U.S. 30 Index outperformed the broader IPOX U.S. 100 Index by 36 bps, its biggest relative gain this year.
- Notable is the continued strength in global payment processers with IPOX heavyweights Visa (V), Cielo SA (CIOXY.PK) and Redecard (RDCSF.PK) all charging higher.
Key IPOX Indexes and Index Returns YTD
Key IPOX Indexes | Return Week (%) | 2011 Return YTD (%) | +/- Benchmark YTD |
IPGLC (USD) | -2.66 | 5.64 | |
IPGL100 (USD) | -2.26 | 5.91 | |
IPGL50 (USD) | -2.06 | 6.32 | |
IPGL30 (USD) | -1.16 | 8.61 | Significant+ |
WTD (EUR) | 1.50 | 1.95 | |
IPXO (USD) | -1.91 | 9.92 | Significant + |
IPXT (USD) | -1.55 | 9.68 | Significant + |
IXTE (EUR) | -0.93 | 6.01 | Significant + |
IPXUJPEU (EUR) | -0.75 | 5.93 | Significant + |
IPTA (USD) | -1.56 | 14.21 | Significant + |
IPXUAPUS (USD) | -2.09 | 13.02 | Significant + |
IPXUEM (USD) | -3.06 | 0.78 | |
IPXUBRIC (USD) | -3.18 | -3.90 | |
IPXUCHCP (USD) | -2.29 | 5.85 | Significant + |
CNI (USD) | -2.80 | 4.05 | Significant + |
IPXUCHAP (USD) | -1.19 | -1.52 | |
IPXUCAUP (USD) | -2.21 | -2.57 | Significant - |
IPXULATM (USD) | -4.18 | -5.85 | |
IPXULATT (USD) | -3.63 | -5.05 | |
Key IPO Debuts: (Week 05/02/2011)- U.S. more jittery:
Company | Ticker | Return over IPO (%) |
CFR Pharmaceuticals SA | CFR CI | 36.04 |
NetQin Mobile Inc | | -26.90 |
RenRen Inc | | 20.00 |
Thermon Group | | 6.67 |
Boingo Wireless Inc | | -10.37 |
RPX Corp | | 40.79 |
- 24 IPOs launched in the global regions last week with the average (median) IPO gaining just 8.29% (+0.53%) based on the final offering price, less than during the previous weeks.
- Another six companies went public in the Chinese A-shares market, with the average (median) IPO falling 5.81% (-9.94%) based on the final offering price on the week. The negative average (median) reception to the deals for a second week in a row underlines the continued malaise in China-linked equity capital markets sentiment and calls for attractive pricing terms for Hong Kong’s next large accessible deals, including Glencore, Prada or Samsonite.
- Lackluster international IPO pricing sentiment spilled over into a more muted performance of the average (median) deal going public in the U.S., with the average (median) deal rising 5.87% (+4.81%), hardly enticing considering the highly oversubscribed nature of IPOs such as RenRen. Amid huge trading volume, now Facebook-hedge RENN also exercised the greenshoe on its second day of trading. The best weekly performance belonged to West Coast Patent pooling firm RPX Corp., benefiting from its uniqueness amongst listed/incumbent firms.
Upcoming IPOs: (Week: 05/09/2011) – More U.S. IPOs:
Company | Ticker | Day | Lead |
ArborGen Inc | | 5/9 | CITI, GS |
China Zenix Auto | | 5/10 | MS |
Jiayuan.com | | 5/10 | BAML, CITI |
Kosmos Energy | | 5/10 | BCLY, CITI |
FriendFinder | | 5/11 | IMPCAP |
NGL Energy | | 5/11 | RBCCM, WFC |
Phoenix New Med. | | 5/11 | DB, MACQUA |
- Ahead of the IPO of Swiss mining conglomerate Glencore, seven more IPOs are scheduled for public debut in the United States.
At least four IPOs (ZX, DATE, KOS and FENG) derive 100% of their revenue from markets outside the U.S., which we view as adding to the already risky nature of the respective deals.
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 and related investment products may be long and short aforementioned companies.
