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SUMMARY:

The IPOX Strategy Indexes continued to benefit most from the decline in global risk and recorded another week of strong relative gains across the index universe. Initial IPO action confirmed the longer-term trend: While U.S. domiciled deals surged, Hong Kong IPOs disappointed anew.

WEEKLY HIGHLIGHTS:

· The IPOX Strategy Indexes extended the relative gains as global risk continued to decline: The IPOX Strategy Indexes closed out the week with a strong note with the IPOX Global 50 (IPGL50) rising by +1.35% to +16.16% YTD, extending the relative YTD gain vs. benchmark MSCI World (MXWD) by +44 bps. to +545 bps. (Relative) performance across the IPOX Regional Strategy universe was solid: In the United States, the IPOX U.S. IPO and spin-off ETF (TICKER: FPX extended the YTD jump by +0.36% to +16.36% with YTD Index spreads vs. benchmark Russell 3000 (ETF: IWV) extending to +700 bps. The IPOX Europe universe recouped last week's relative loss with the IPOX Europe 50 (IPXUJPEU) gaining +0.21% to +9.27% YTD, while the Stoxx 50 (SX5P) dropped. Germany's DAX (DAX) rose slightly. The IPOX Asia-Pacific 30 (IPTA) rose a further +1.82% to +16.65% YTD, outperforming the MSCI Asia-Pacific (MXPC) by +0.42%. Upside focus within IPOX Emerging Markets remained on the big relative momentum in the IPOX Latin America universe (IPXULATT: +0.65% to +27.17% YTD) with the portfolio extending its relative strength vs. benchmark MSCI Latin America (MXLA) to +901 bps.

· The strong performance was driven by some of the key heavyweights including Japanese Financial Dai-Ichi Life (8750 JP: +10.01%) or Visa [(V): +2.20%]. Hedge-fund and IPOX heavyweight baby nutrition maker Mead Johnson Nutrition [(MJN): +3.32%] closed the week at a record high on enthusiasm over its potential bid for Pfizer's (PFE) baby food unit. Japanese/Korean gaming company Nexon (3659 JP: +5.16%) rose against the trend in gaming stocks.

Key IPOX Strategy Indexes Returns YTD 2012:

Ticker (BBG/Reuters)Return

Week (%)

YTD 2012 (%)Name
IPGLC (USD)+1.27+16.37IPOX Global Comp
IPGL100+0.84+15.76IPOX Global 100
IPGL50+1.35+16.16IPOX Global 50
IPGL30+0.97+14.25IPOX Global 30
IPXO+0.36+16.36IPOX U.S. 100
IPXT+0.43+13.74IPOX U.S. 30
IXTE (EUR)+0.22+7.53IPOX Europe 30
IPXUJPEU (EUR)+0.21+9.27IPOX Europe 50
IPTA+1.82+16.65IPOX Asia-Pac. 30
IPXUEM+0.92+19.43IPOX Emerging Mkts.
IPXUBRIC+0.99+22.49IPOX BRIC 25
IPXUCHCP+0.80+18.07Chin IPOX Comp.
CNI+0.46+15.69China IPOX 20
IPXUCAUP+4.48+12.20China IPOX Comp.
IPXULATT+0.65+27.17IPOX LatAm 20
IPXK30K (KRW)-0.85+1.93IPOX Korea 30

Most significant IPOs launched (week 02/20/2012):

CompanyTickerReturn / IPO (%)
SaraminHR Co Ltd143240 KS+218.00%
Maxvalu Kyushu Co3171 JP+1.92%
Bazaarvoice IncBV US+37.58%
Christine Intern.1210 HK-2.5%
Proto Labs IncPRLB US+81.25%
Xiwang Special1266 HK-16.60%
Ceres IncCERE US+3.10%

Last week's initial pricing action once again underlines a big trend persistent since Q3 2011 and the important roles of positive feed-back trader participation in U.S. IPOs: Investors and traders flock to U.S. domiciled deals at the expense of their international (particularly Hong Kong) counterpart: While IT-linked Bazaarvoice (BV) and ProtoLabs (PRLB) rose substantially above their respective offering price, Chinese Steelmaker Xiwang Special (1266 HK) closed the week sharply below offer.

Week Ahead (2/27/2012): U.S. continues to dominate

CompanyCodeCountryLead Manager
Argos TherapeuticsARGS USU.S.A.Canaccord
GCT SemiGCTS USU.S.A.BofA
Home Loan Serv.HLSS USU.S.A.BCLY, C, DB
Provident MortgagePMCA USU.S.A.CS, DB
Sunshine Oilsands2012 HKH.K.BOCI, DB, MS
Yelp IncYELP USU.S.A.CITI, JEFF

Amid strong markets, low market risk levels and general IPO enthusiasm ahead of Facebook, we expect continued Q1/Q2 2011-like indiscriminately strong demand for the "average" U.S. domiciled deal in specialty industries. This week's line-up for global IPO investors include U.S. deals such as social networker Yelp Inc. (YELP), GCT Semiconductor (GCTS), Home Loan Services (HLSS) and Provident Mortgage (PMCA). While we favor all other U.S. IPOs lined up for the week, Yelp has been gaining most media attention. The company displays much of the characteristics of the "average" small-cap U.S. IPOs, such as a proportional increase of revenue and cost pre-IPO. Notable is a "hidden" revenue/growth warning for its core U.S. market in the prospectus. Sunshine Oilsands (2012 HK) is the only IPO lined up in the struggling Hong Kong IPO market.

Source: Last Week In Global IPOs: Amid Low Risk, IPOX Strategy Indexes Best In Capturing Upside