With China reducing the YTD losses, most developed markets traded subdued as the Greece fall-out and weak U.S. data continue to weigh on equities. Key global IPOs priced at the expense of a modification of offering terms. A diversified mix of global IPOs is in the pipeline. The spotlight is on Korean IPOs.
- The IPOX Global Indexes finished the week lower, with the IPOX Global 30 Index (IPGL30) - measuring the “going public” effect of the largest and most liquid global IPOs and spin-offs - dropping -1.07% to +1.23% YTD. 59/41 companies in the broad IPOX Global 100 Index (IPGL100) rose, with the average equally-weighted index member gaining +0.78% (+0.45%), substantially more than the applied market-cap weighted index.
- Weakness was concentrated amongst some of the IPOX heavyweights with Philip Morris International (PM: -4.94%) and Banco Santander Brazil (BSBR: -2.41%) falling sharply. General Motors (GM: +3.17%) rose with the increasing market perception that most of the “overhang concern” is now priced in. The losses in some large and highly liquid index members during Russell Rebalancing had a big impact on IPOX U.S. Indexes spreads: With the Russell 2000 (RUT: +2.05%) outperforming the S&P 500 (SPY: -0.24%) by a massive 229 bps., the broader IPOX U.S. 100 Index (EFT FPX: +0.31%) gained 75 bps. vs. the IPOX U.S. 30 Index (IPXT: -0.44%) with both indexes remaining the top U.S. equity index performers YTD.
- Upside focus within other IPOX Regional Indexes remained on the IPOX Asia-Pacific 30 Index (IPTA: +2.53%) which re-bounded strongly from the sharp losses: With most of the Macau-casino complex trading well supported, the index gained on big moves in H.K consumer names including Bosideng (3998 HK: +9.09%) and Belle (1880 HK: 8.86%).
Key IPO Debuts: (Week 06/20/2011):
Return / IPO (%)
Global Ports Investment
Adler Modemaerkte AG
Ubisense Group PLC
- 17 accessible global IPOs launched last week with the average (median) IPO gaining +6.12% (+0.00%) based on the final offering price on the week. While the sharp fall in Xiangyu Dredging (871 HK: -24.45%) underlines the malaise in the H.K IPO markets, Italian fashion house Prada SpA (1913 HK: +0.25%) debuted unchanged. Big losses in some of the recent IPOs took a big toll on initial sentiment for U.S. IPOs with Vanguard Health Systems (VHS: -0.28%) and KiOR (KIOR: +0.25%) able to raise substantially less than originally projecting. We note the strong rebound in initial IPO sentiment in mainland China: 5 IPOs debuted on the mainland exchanges with the average (median) equally-weighted IPO gaining +18.80% (+12.31%), an improvement in initial IPO sentiment for a fourth week in a row.
Upcoming IPOs: (Week: 06/27/2011):
Brazil Pharma SA
China Fiber Optic
DB, GS, JPM
Hi Mart Co Ltd
Tibet 5100 Water
- Amid jittery global (large) caps, elevated risk and ahead of the summer holiday, a diversified mix of IPOs is scheduled. Most initial pricing pressure/delay risk is seen in the hard-hit H.K. IPO market with small-caps China Fiber (3777 HK), China Outfitters (1146 HK), Shuanghua (1241 HK) and Tibet 5100 Water (1115 HK) affected. Our key focus remains on the burgeoning South Korean IPO market with IPOs by retailer Hi Mart (071840 KS) and industrial Korean Aerospace (047810 KS) lined up. We expect strong initial interest for the U.S. IPO of global vacation rental market provider HomeAway (AWAY US), which now sells 12% of its equity on the market.
Disclosure: The IPOX Indexes and related investment product may be long or short aforementioned companies.