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Summary:

Global benchmarks recorded losses for a second week in a row as the negative emerging markets sentiment and dollar strength vs. the euro fueled profit taking in developed markets. While the IPOX Indexes traded broadly in line, we note big declines in select IPOs with initial pricing sentiment for U.S. deals deteriorating. Key global IPOs lined up.

IPOX Indexes:

Amid increasing jitters, the IPOX Global Indexes traded lower last week with the IPOX Global 100 Index (IPGL100) losing -0.79%, outperforming benchmark MSCI World (MXWD). Ahead of the Glencore IPO, weakness was driven by big declines in IPOX Global Materials stocks with Molycorp (MCP: -9.84%), Fresnillo (OTCPK:FNLPF -7.80%), Duratex (DEX3 BS: -7.34%) or Eurasia Natural Resources (ENRC LN: -5.33%) leading the way.

  1. 52/100 companies in IPGL100 rose, with the average (median) constituent gaining 0.02% (0.15%), substantially more than the applied market-cap weighted index.
  2. In IPOX Global Regions, most IPOX developed markets indexes fell, with indexes skewed towards large-cap stocks outperforming indexes with broader exposure for the second week in a row: e.g., with earnings season in swing, declines in select U.S. small-caps such as 2010 tech-IPO Intralinks (IL: -25.32%) moved the spread between the IPOX U.S. 30 (IPXT) and IPOX U.S. 100 Index (IPXO) a large 49 bps. in favor of IPXT. In Europe, big declines in 2010 retail IPOs SuperGroup (SGP LN: -27.50%) and Ocado (OCDO LN: -11.14%) moved index spreads in favor of the narrower IPOX Europe 30 Index (IXTE) vs. the broader IPOX Europe 50 (IPXUJPEU).
  3. Latin American IPOs as measured by IPOX continued to plunge, with the IPOX Latin America 20 Index (IPXULATT: -4.02%) affected by a large drop in Brazilian consumer stock Hypermarcas (HYPE3 BS: -21.52%) on earnings, for example.

Key IPO Debuts: (Week 05/06/2011):

Company

Ticker

Return over IPO (%)

FriendFinder Networks

FFN US

-23.40

Kosmos Energy Ltd

KOS US

0.72

Jiayuan.com

DATE US

-2.73

China Zenix Auto

ZX US

4.17

Phoenix New Media Ltd

FENG US

19.09

20 notable IPOs launched in the global regions last week with the average (median) IPO rising +0.37% (+3.13%) based on the final offering price on the week. Following big declines amongst the U.S. IPOs during the previous week with NetQin (NQ: -35.30%), RenRen (RENN -6.00%) and Boingo (WIFI: -20.37%) dropping and difficult international IPO market conditions, initial pricing sentiment for companies going public in the U.S. deteriorated further this week: While African oil explorer Cosmos Energy (KOS US: +0.72%) benefited from its renowned list of backers, other deals were able to trade only at the expense of a reduced size and/or price.

Another 4 companies raised USD 502 million on the Chinese mainland IPO market. The initial reception to these deals improved from the previous weeks, with the average (median) IPO gaining +7.33% (+5.20%) based on the final offering price on the week.

Upcoming IPOs: (Week: 05/16/2011):

Company

Ticker

Day

Lead

Jiangchen Intern.

1069 HK

16/05

Bank of China

Advanced Bio

ABHB US

17/05

BAML, JPM

Yuanda China

2789 HK

17/05

BOCINT, DB

Billion Industrial

2299 HK

18/05

CCB, UBSAHK

LinkedIn Corp

LNKD US

18/05

BAML, JPM, MS

Fairson Holdings

8132 HK

18/05

Quam

Glencore Intern.

N/A

19/05

BAML, BNP

7 notable IPOs are lined up with the Hong Kong IPO market seeking to rebound: 4 Hong Kong IPOs are set to list with notable recent changes in terms (cut in IPO price and offering size) affecting Yuanda China (2789 HK) and Billion Industrial (2299 HK) presenting opportunities.U.S. focus is on the IPO of social networker LinkedIn (LNKD US): LNKD has some of the hallmarks of a late 1990’s internet IPO, such as: a very small percentage of total equity offered (8.30%) and large expected variations in revenues from key activities (e.g. we note the sharp decline in revenues from premium subscriptions at the benefit of revenues from hiring solutions). Amid declines in global materials stocks, index providers (FTSE, MSCI) are set to include blockbuster IPO Glencore through “fast-entry” rules upon listing debut. Recent key IPO benefiting from “fast-entry" rules: Japan’s Dai-Ichi Life (8750 JP: -21.81% since inclusion in 2010).


Key IPOX Indexes and Index Returns YTD
Key IPOX Indexes
Return
Week (%)
2011 Return YTD (%)
+/- Benchmark YTD
IPGLC
-0.73
4.87
IPGL100
-0.79
5.08
IPGL50
-0.08
6.23
Significant+
IPGL30
-1.10
7.42
Significant+
WTD
1.22
3.19
IPXO (ETF: FPX)
-0.47
9.43
Significant +
IPXT
0.02
9.70
Significant +
IXTE
-0.87
5.09
Significant +
IPXUJPEU
-1.09
4.78
Significant +
IPTA
-0.21
13.96
Significant +
IPXUAPUS
0.14
13.18
Significant +
IPXUEM
-0.67
0.11
IPXUBRIC
-1.94
-5.77
IPXUCHCP
0.45
6.33
Significant +
CNI
1.15
5.25
Significant +
IPXUCHAP
-0.05
-1.57
IPXUCAUP
0.35
-2.22
Significant -
IPXULATM
-2.19
-7.91
Significant -
IPXULATT
-4.02
-8.86
Significant -







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/or short aforementioned companies.

Source: The Week in Global IPOs: Deal Sentiment Deteriorates