Equities rose anew underpinned by a powerful mix of solid U.S. corporate earnings and the lack of negative news flow from European debt, while weak Chinese economic data underpinned the hope for further Asian stimulus. Big shake-out in recent IPOs continued. Mixed debut for the key global IPOs.
Key IPOX Indexes rise, select mid-caps extremely volatile after earnings: The IPOX Global 50 (IPGL50), key gauge for the performance of the largest and most successful global IPOs and spin-offs over a four-year rotational cycle, rose +1.28% to +11.04% YTD, underperforming benchmark MSCI World (MXWD) by -27 bps. Big moves in select components in the IPOX Global Composite (IPGLC) universe remained the theme of the week: Amongst the highlights were the plunge in Japanese game maker and Dec. 2011 IPO USD 6.8bn Nexon (3659 JP: -22.42%) which fell Zynga-like (ZNGA: +8.46%) by its daily limit on weak corporate results and immediate downgrades. Further big declines in prominent IPOs included a -10.43% drop in USD 1.4bn Indonesian Golden Energy Mines (GEMS IJ) and USD 10.4bn Turkiye Halk Bankasi (HALKB TI: -8.31%) on stake sale rumors and downgrades. Small- and mid-cap U.S. IPOs rising strongly after earnings included specialty tech storage maker 06/11 IPO Fusion-IO Inc. (FIO: +37.81%) and 03/12 IPO Millennial Media (MM US: +51.60%), a provider of advertising and data services solutions. Within the IPOX Regional universe, the IPOX U.S. 100 (ETF: FPX) beat the S&P 500 (SPX), while the narrower and large-cap centric IPOX U.S. 30 (IPXT) lagged for another week, to the tone of -64 bps. vs. the S&P 500 (SPX) and a large -84 bps. vs. the broader IPOX U.S. 100 (IPXO). Driver for the unusually big performance differential continue to be corporate actions related to some of the larger recent U.S. IPOs such as dividend heavy pipeline operator Kinder Morgan (KMI: -3.48%). Spanish stocks remained the highlight within the IPOX Europe universe with bail-out talks over embattled Bankia (BKIA SM: +31.28%) supporting. Specialty IT Spanish travel reservation systems operator Amadeus IT (AMS SM: -8.55%) fell after reaching an post-IPO high on Monday. The firm conducted a large private placement accounting for 6.7% of its shares outstanding. The IPOX Europe 50 (IPXUJPEU: +2.73%) outperformed benchmark STOXX 50 (SX5P: +1.29%) by a large +144 bps., indicative of the increasing risk appetite following the big declines in select exposure over the past months. Across the developed Asia-Pacific Universe, the IPOX Asia-Pacific 30 (IPTA) rose +2.08% to +14.76% YTD, underperformed benchmark MSCI Asia-Pacific (MXPC) by -63 bps. In the run-up to pricing the massive re-IPO/privatization of Japan Airlines (9201 JP) scheduled for mid-September, Japan-traded small-and mid-caps in specialty sectors, including snack-food maker Calbee (2229 JP: -0.71%) and Pola Orbis (4927 JP: -0.72%) reached intra-week post-IPO highs. China IPOs stabilized with the IPOX China 20 (CNI: +2.91%) beating benchmark HSCEI Enterprise (HSCEI).
· IPOX Long-only Strategy Returns YTD 12:
|Ticker (BBG/Reuters)||Week||Q2 12||YTD 12|
|IPOX Global 50 (IPGL50) (USD)||+1.28%||-8.13%||+11.04%|
|MSCI World (MXWD)||+1.65%||-6.35%||+7.94%|
|IPOX U.S. 100 (IPXO)||+1.27%||-5.23%||+15.87%|
|IPOX U.S. 30 (IPXT)||+0.43%||-3.67%||+15.52%|
|S&P 500 (SPX)||+1.07%||-3.29%||+11.79%|
|IPOX Europe50 (IPXUJPEU) (EUR)||+2.73%||-10.75%||+1.02%|
|IPOX Europe30 (IXTE) (EUR)||+2.82%||-12.33%||-3.51%|
|STOXX 50 (SX5P) (EUR)||+1.29%||-3.16%||+8.11%|
|IPOX Asia-Pacific 30 (IPTA)||+2.08%||-5.69%||+14.76%|
|MSCI Asia-Pacific (MXPC)||+2.71%||-6.89%||+4.84%|
|IPOX China 20 (CNI)||+2.91%||-8.97%||-1.52%|
|Hang Seng Enprs. (HSCEI)||+2.53%||-10.12%||-0.32%|
|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 08/06/12): MANU
|Company||Ticker||Return / IPO (%)|
|Bloomin' Brands Inc||BLMN US||16.91%|
|Dynam Japan Holdings Co||6889 HK||-12.14%|
|Manchester United Ltd||MANU US||0.00%|
|Peregrine Semiconductor||PSMI US||6.43%|
|Performant Financial Corp||PFMT US||17.78%|
|Success Holdings Co Ltd||6065 JP||24.39%|
12 global IPOs commenced trading last week with the average (median) accessible (non-China A Share) IPO rising +7.69% (+6.43%). China A Share deal flow remained strong with agri machines maker First Tractor (601038 CH: +98.33%) and motorcycle maker Loncin Motor (603766 CH: +103.04%) celebrating a big first week. Japan-domiciled gamer Dynam Japan (6889 HK: -12.14%) fell against the trend. While Carl's Jr. operator CK restaurants (CK US) pulled the offering, the performance of the remaining U.S. domiciled IPOs remained solid, with all priced deals closing above the final offering price. After cutting the IPO price by a massive 30% from the high end (representing ca. USD 1bn in perceived market cap), U.K. soccer club Manchester United (MANU US: +0.00%) finished the week unchanged. The de-facto value and capital structure play still trades at an expensive 6 times 2011 revenue with medium term downside risk remaining. This risk originates mostly from the big overhang of stock necessary to be sold to market participants to substantially reduce the financing costs which currently consummate 81.02% of 2011 operating income.
· The Week ahead - IPO market on holiday:
|Hi-Crush Partners LP||HCLP US||U.S.A.||CS, MS, UBS|
No significant global IPOs lined up for the upcoming week.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.