SUMMARY:
Global stocks rose on solid U.S./German data, positive U.S. bank action, a smooth FED and Futures & Options expiration. IPOX U.S. - leading for much of the year - underperformed substantially. Amid strong risk appetite, U.S. IPOs debuted strongly. Diversified global IPO deal-flow in the pipeline.
HIGHLIGHTS:
· Most IPOX Strategy Indexes rise but underperform, IPOX U.S. indicates more caution ahead for U.S. benchmarks:Despite continued relative weakness in China-lined exposure, the IPOX Global 50 (IPGL50) rose anew, adding +1.47% to +18.87% YTD, underperforming benchmark MSCI World (MXWD) for a second week in a row. With the exception of IPOX China (CNI) and IPOX Asia-Pacific (IPTA), (relative) losses extended across the strategy index universe: In the United States, e.g., the IPOX U.S. IPO and spin-off ETF (TICKER: FPX rose just +0.87% to +18.62% YTD, vs. +2.28% for benchmark Russell 3000 (ETF: IWV, its biggest underperformance this year. Relative weakness was driven by lackluster performance in the IPOX heavyweights including pipeline operator KMI (KMI: -1.79%), payment processor Visa (V: -0.42%) or car maker General Motors (GM: -0.20%). Ahead of the first notable European IPO deal flow in 2012, the IPOX Europe (IPXUJPEU: +1.16% to +9.11%) also lagged the benchmarks. The IPOX Asia-Pacific 30 (IPTA: +2.59% to +21.06%) benefited from big momentum in hard-hit Japanese Financial Dai-Ichi Life (8750 JP: +3.18%) and H.K. insurer AIA Group (1299 HK: +3.84%), while the key Hong Kong casino operators Wynn Macau (1128 HK: +6.22%), Sands China (1928 HK: +9.60%) closed the week at a post-IPO record. In the IPOX Emerging Markets Universe (IPXUEM), we note the continued strong relative performance in the IPOX China universe (CNI and IPXUCHCP) with the key IPOX China 20 gaining +0.56% to +16.20% YTD, vs. another week of losses for the Hang Seng China Enterprise Index (HSCEI) and the FTSE China 25 Index (XIN0I).
Key IPOX Strategies Returns YTD 2012:
Ticker (BBG/Reuters) | Return Week (%) | YTD 2012 (%) | Name |
IPGLC (USD) | +1.05 | +16.99 | IPOX Global Comp |
IPGL100 | +1.15 | +17.33 | IPOX Global 100 |
IPGL50 | +1.47 | +18.87 | IPOX Global 50 |
IPGL30 | +1.56 | +16.32 | IPOX Global 30 |
IPXO | +0.87 | +18.62 | IPOX U.S. 100 |
IPXT | +1.19 | +16.69 | IPOX U.S. 30 |
IXTE (EUR) | +1.02 | +7.41 | IPOX Europe 30 |
IPXUJPEU (EUR) | +1.16 | +9.11 | IPOX Europe 50 |
IPTA | +2.59 | +21.06 | IPOX Asia-Pac. 30 |
IPXUEM | +0.61 | +19.69 | IPOX Emerging Mkts. |
IPXUBRIC | -1.14 | +19.90 | IPOX BRIC 25 |
IPXUCHCP | +0.64 | +18.06 | Chin IPOX Comp. |
CNI | +0.56 | +16.20 | China IPOX 20 |
IPXUCAUP | -1.91 | +10.82 | China IPOX Comp. |
IPXULATT | -1.53 | +22.97 | IPOX LatAm 20 |
IPXK30K (KRW) | +0.46 | +2.67 | IPOX Korea 30 |
· Most significant IPOs launched (week 03/12/12):
Company | Ticker | Return / IPO (%) |
Allison Transmission Holdings | ALSN US | 5.38% |
Demandware Inc | DWRE US | 55.00% |
LIFENET INSURANCE CO | 7157 JP | -2.00% |
M/A-COM Technology Solutions | MTSI US | 13.00% |
15 global IPOs commenced trading last week with the average (median) IPO gaining a strong +37.01% (+32.43%) based on the final offering price on the week. While the China A Shares IPO market remained hyperactive, accessible focus was on U.S. IPOs with the respective deals trading in line with expectations.
· Week Ahead (03/19/2012): Strong global deal flow
Company | Code | Country | Lead Manager |
BATS Global | BATS US | U.S.A. | CITI, CS |
Caesar Stone Sdot | CSTE US | U.S.A. | BAIFIN, BCLY |
DKSH Holding AG | DS5 SW | CH | BEREN, CS |
ExactTarget Inc | ET US | U.S.A. | DB, SNW |
Kinetic Mines | 1277 HK | H.K. | HSBC, UBS |
Trigiant Group Ltd | 1300 HK | H.K. | FSCAP, SINO |
Vantiv Inc | VNTV US | U.S.A. | CS, DB, GS |
Vipshop Holdings | VIPS US | U.S.A. | DB |
Ziggo BV | ZIGGO NA | NL | DB, JPM, MS |
With the European IPO window finally opening, a diversified mix of companies are in the global IPO pipeline. Amongst the stand-outs are Swiss-based market-expansion service provider DKSH Holding AG (DS5 SW) - with insiders seeking to sell around 30% of the company for CHF 821m - and Dutch cable TV provider Ziggo NV (ZIGGO NA), the largest European IPO since last year's stock market listing of Spain's Financial and IPOX member Bankia SA (BKSIA SM). Ziggo's pricing is set to benefit from the strong performance in German cable operator Kabel Deutschland (DK8 GY) which has more than doubled since its 03/10 IPO. Amid the lackluster performance in global mining stocks, Mongolian Miner Kinetic Mines (1277 HK) seeks to raise HKD 1.4bn for a 11% stake on the H.K. stock exchange. Pure Private Equity/M&A-type IPOs in the U.S. include the IPO of payment processor Vantiv (VNTV US) - seeking to raise USD 530m for a 23% stake in the company - while proceeds from the sale of shares in Kansas-city based global exchange operator BATS Global (BATS US) and Israel-domiciled quartz- kitchen hardtop maker Caesar Stone (CSTE US) are also exclusively earmarked to go to selling shareholders/dividends. E-marketer ExactTarget (ET US) and China-based e-retailer Vipshop (VIPS US) are pure growth/tech-style IPOs with the respective risk/return profile with Vipshops (VIPS) set to benefit from the recently strong momentum for China-IPOs launched in the U.S.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.