U.S. and European benchmarks slumped as a string of negative economic news caused yields to start to price in deflation. The IPOX Global 50 recorded a strong relative week as China-linked exposure rose. In the aftermath of the Facebook (NASDAQ:FB) IPO, no significant IPO deal flow scheduled.
Amid slumping in global markets, the IPOX Global 50 outperforms strongly as China-linked exposure strengthens: The index, a key gauge for the performance of the most significant global IPOs and spin-offs over a four-year rotational cycle, fell -1.63% to +5.03%, extending the relative gains versus benchmark MSCI World to +753 bps. YTD. Relative strength was driven by a big rise in Asia-Pacific traded large-caps with Chinese real estate developer Evergrande Real Estate Group (3333 HK: +10.34%), Chinese Financial CITIC Securities (6030 HK: +5.94%), hard-hit Chinese Industrial Longyuan Power Group (916 HK: +3.48%) or Financial AIA Group (1299 HK: +2.23%) leading the way. MEG Energy Corp. (MEG CN: -12.29%) slumped on a big decline in oil, while Russia-domiciled Yandex NV (NASDAQ:YNDX) (-8.97%) as well as Facebook proxy Mail.ru (MAIL LI: -8.79%) ranked amongst the biggest decliners.
The U.S. ranked once more was among the best performing regions in the IPOX Global Composite (IPGLC) universe: Despite a big drop in the IPOX heavyweights including Visa International (NYSE:V) and secondary names including Teradata (NYSE:TDC), performance of the index remained with the benchmarks: The IPOX U.S. 30 (IPXT: -3.26% to +7.73%) fell in line with the S&P 500 (SPX), remaining +610 bps ahead YTD. Notable is the outperformance of the broader IPOX U.S. 100 (ETF: FPX) vs. the Russell 2000 (RUT) as companies including grocer The Fresh Market (NASDAQ:TFM) and consulting group Booz Allen Hamilton (NYSE:BAH) surged. Key IPOX constituents held by Warren Buffets Berkshire Hathaway (BERK US) including VOLT manufacturer General Motors (NYSE:GM) and discounter Dollar General (NYSE:DG) continued to out-perform. IPOs previously most traded in the notorious pre-IPO markets continued to slump, including Facebook), LinkedIn (NYSE:LNKD), Zynga (NASDAQ:ZNGA) and Groupon (NASDAQ:GRPN).
In other global regions, relative performance in the IPOX Europe universe (IXTE, IPXUJPEU) remained depressed as Spanish Financial Bankia (BKIA SM: -35.03%) and Caixabank (CABK SM: -10.17%) continued to slump. Performance within the IPOX Asia-Pacific universe (IPTA) was mixed with the IPOX Asia-Pacific 30 (IPTA: -0.07%) closing the week marginally lower, with the portfolio remaining +1144 bps. ahead of benchmark MSCI Asia-Pacific (MXPC) YTD. A good week in the Macau-domiciled casino complex including Wynn Macau (1128 HK: +2.50%) and Sands China (1928 HK: +1.35%) supported. Gree Inc. (3632 JP: -17.57%), once the poster child for the exploding valuations among U.S. social networkers, fell on massive liquidation selling.
· Key IPOX Strategies Comparable Returns YTD 2012:
|IPGL50 (NYSEARCA:USD)||-1.63||5.03||IPOX Global 50|
|IPGL30||-2.50||1.52||IPOX Global 30|
|IPXO||-3.57||7.11||IPOX U.S. 100|
|IPXT||-3.26||7.73||IPOX U.S. 30|
|IPXUJPEU (EUR)||-5.37||-10.87||IPOX Europe 50|
|IXTE (EUR)||-5.95||-14.22||IPOX Europe 30|
|SX5P (EUR)||-2.75||-6.24||STOXX 50|
|IPTA||-0.07||7.82||IPOX Asia-Pacific 30|
|CNI||1.13||0.29||IPOX China 20|
|HSCEI||0.86||-3.18||Hang Seng Enterprse|
|Why choose IPOX to close the IPO/spin-off asset allocation gap?|
|§ Proven: Real-time performance over market cycles|
§ Scalable and Stable: Clearly defined Philosophy
§ Patented: Index Technology
§ Best in Practice: Support and Research
· Most significant IPOs traded (Week 05/28/12):
|Company||Ticker||Return / IPO (%)|
Ten insignificant global IPOs launched last week with the average (median) IPO gaining +2.77% (+2.45%). IPOs on the Chinese mainland remained in focus with five IPOs commencing trading, and recording and average (median) initial gain of +5.47% (-0.10%).
· The Week ahead - Amid the slump, no IPOs
The spike in global risk as well the aftermath of the Facebook mispricing has caused the delay/postponement of a number of significant global deals including the IPO of Graff Diamonds (1306 HK) or the issue of stapled securities of Formula One Holdings in Singapore. Ahead of Futures and Options expiration week and the re-balancing of the IPOX Indexes, no major deals are scheduled for trading during the upcoming week.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.