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Global equities remained under pressure during expiration week as risk continues to elevate on weak Asia, Greece and lackluster U.S. data. Downside volatility in the global IPOs rose sharply with the key deals disappointing. Broad mix of global IPOs lined up for trading debut.

IPOX Indexes Highlights:
  • The IPOX Global Indexes finished lower with the IPOX Global 30 (IPGL30), highly liquid performance benchmark measuring the “going public effect” of the largest global IPOs and spin-offs over the past four years, falling 0.81% to +2.32% YTD.
  • The IPOX Indexes weekly return profile underlines the impact of fund redemptions plus asset allocation shifts away from less seasoned equities and emerging markets: While the narrower IPOX Global 30 (IPGL30) and IPOX Global 50 (IPGL50) traded in line with the benchmarks, the broader IPOX Global Indexes (IPGLC and IPGL100) underperformed significantly.
  • In the IPOX Regional Indexes, only the IPOX U.S. universe (IPXO, IPXT) traded higher: The IPOX U.S. 100 Index (NYSEARCA:FPX) rose 0.36%, remaining the best performing broad U.S. benchmark YTD (+4.76%) and year-over-year (+22.38%). The index once more benefited from takeover activity for recent IPOs such as Graham Packaging (NYSE:GRM), which rose on a buy-out from Reynolds Group. The narrower IPOX U.S. 30 Index (IPXT) outperformed amid a huge week for IPOX heavyweight Lorillard (NYSE:LO) and a late rally in Scripps Networks (NYSE:SNI) on takeover rumors.
  • All other IPOX Regional Indexes traded in line to lower versus the benchmarks, with notable weakness in the IPOX Europe universe (IXTE, IPXUJPEU) and select IPOX Emerging Markets Indexes (CNI, IPXULATT, IPXUCAUP), indicating liquidation-linked fund selling.
Key IPO Debuts: (Week 06/13/2011):
Company
Ticker
Return / IPO (%)
Bankrate Inc
RATE US
2.27%
Samsonite International
1910 HK
-7.17%
Pandora Media Inc
P US
-16.25%
Wanli International
900180 KS
-18.78%
Leechem Co Ltd
131100 KS
67.86%
NextEye Co Ltd
137940 KS
-32.20%
Kolon Plastic Inc
138490 KS
148.68%
3PSystem Co Ltd
110500 KS
-15.00%
  • 11 accessible global IPOs launched last week with the average (median) IPO gaining +12.37% (-9.29%) based on the difference between the final offering price and the week’s close, indicative of the increasing negative initial IPO sentiment in global IPO markets. Most initial upside focus was in small Korean and Chinese A Share IPOs.
  • With the hallmarks of a late 1990s IPO in place (small % of equity offered, small size, “hot” industry IPO using unconventional valuation techniques), focus was on Internet Radio provider Pandora. After smartly raising the price range on indiscriminant demand from positive feed-back traders seeking another LinkedIn (NYSE:LNKD), the market-cap of the IPO fell by almost 50% from the highs on the first trading day, as huge downside volatility and jittery markets caused investors to withdraw.
  • We believe that Pandora’s price action will lead to a plunge in pre-IPO valuations for many of the highly anticipated (and particularly for the larger) Internet/social networking IPOs (e.g. Groupon (NASDAQ:GRPN), Zynga and Facebook) seeking to use the same toxic mix of issuing characteristics to maximize initial market capitalization.
Upcoming IPOs: (Week: 06/20/2011):
Company
Ticker
Day
Lead
Tibet 5100 Water
1115 HK
6/20
JPM, ICBC
Xiangyu Dredging
871 HK
6/20
CCB
Adler Modemaerkte
ADD GR
6/22
Credit Agricole
Verallia
VERAL FP
6/22
BAML, BNPPAR,
KiOR Inc
KIOR US
6/23
CS, GS, UBSINV
Prada SpA
1913 HK
6/24
B.IMI, CLSA, GS,
Vanguard Health
VHS US
6/24
BAML, BCLY, DB,
  • Amid the plunge in many of the recent key global IPOs, including Glencore (GLEN LN: -9.06% from the first close), MGM China (2282 HK: -16.13%), LinkedIn (LNKD: -30.47%) or Yandex (YNDX: -20.67%), a broad mix of global IPOs are lined up. Media highlight is Thursday’s H.K debut of Prada SpA (1913 HK) which priced towards the low end and reduced the offering size.
  • IPOX focus is on U.S. speciality health-care IPO Vanguard Health (VHS US) which we expect to benefit from powerful returns in key IPOX holding and 2011 IPO HCA (HCA: +11.51%).
Key IPOX Indexes and Index Returns YTD:
Key IPOX Indexes
Return
Week (%)
2011 Return YTD (%)
+/- Benchmark YTD
IPGLC (usd)
-1.74
-0.25
.
IPGL100 (usd)
-1.81
+0.86
.
IPGL50 (usd)
-1.02
+1.24
Significant+
IPGL30 (usd)
-0.81
+2.32
Significant+
WTD (eur)
-0.61
-2.70
.
IPXO (usd)
0.36
+4.76
Significant +
IPXT (usd)
0.57
+5.45
Significant +
IXTE (eur)
-2.18
-2.17
.
IPXUJPEU (eur)
-2.13
-2.68
.
IPTA (usd)
-2.62
+5.08
Significant +
IPXUAPUS (usd)
-3.26
+3.51
Significant +
IPXUEM (usd)
-2.15
-4.72
.
IPXUBRIC (usd)
-2.83
-10.03
Significant -
IPXUCHCP (usd)
-2.60
-5.35
.
CNI (usd)
-4.47
-5.87
.
IPXUCHAP (usd)
-2.54
-10.21
Significant -
IPXUCAUP (usd)
-2.35
-10.24
Significant -
IPXULATM (usd)
-2.60
-9.17
Significant -
IPXULATT (usd)
-3.12
-10.35
Significant -
Source: Last Week in Global IPOs: Pre-IPO Valuations Set to Plunge?

Additional disclosure: The IPOX Indexes and related investment products may be long and short aforementioned companies.