Josef Schuster's  Instablog

SUMMARY:

While China-linked equities traded firm, investors sold Western stocks as weak economic numbers and a "sell on good earnings news" mentality triggered profit taking. Select U.S. stocks experienced Enron type plunges. Amid the pending Facebook IPO, firms set to take a "window of opportunity".

HIGHLIGHTS:

Key IPOX Strategies Returns YTD 2012:

· Most significant IPOs launched (Week 04/30/12):

· The Week ahead - Ahead of Facebook (FB):

Notables around the Facebook IPO - eerie resemblances

a) Last years global IPO cycle (and markets) topped when global miner Glencore Intl. (GLEN LN: -22.64% since IPO) pursued its mega IPO during the third week of May.

b) With Facebook set to price on Thursday, May 17th, a striking feature is the substantially enlarged float to around 12% (up from an initially envisioned 5%), similar dynamics when compared to Zynga Inc. (ZNGA: -16.70% since IPO).

Amid market declines und huge declines in some recent small-cap IPOs, a large number of second and third-tier deals are set to take advantage of the Facebook IPO "window of opportunity": Profitable U.K. technology firm Edwards Group (EVAC US) pursues a capital structure event by selling 12.63% its an IPO while U.S. tech micro-cap Audience Inc. (ADNC US) seeks to sell 25.78% with proceeds going to growth. Other notable IPOs include techs TIM w.e. (TMWE US) (mobile advertising in Latin America), WageWorks (WAGE US) and Loyalty Alliance (LAEC US). We note the huge jump in revenues tied to advisory services in Flying Financial (8030 HK), the only H.K. deal lined up this week. Post-IPO liquidity risk is big for the respective deals.

· IPOX Global beats as U.S., Europe falls, Asian and China--linked exposure rises:Amid worsening U.S. and European macro data, seasonally motivated selling and a Enron-like plunge in select second- and third tier U.S. stocks (e.g. HFL US: -33.40%, GMCR US: -47.60%, UBNT US: -20.03%, INVN US: -19.71%, GRPN: -16.74%), the IPOX Strategies closed the week generally lower. On the global level, e.g., the IPOX Global 50 (IPGL50), fell -1.40% to +16.59% YTD, beating benchmark MSCI World (MXWD) by a large 95bps, and extending its relative YTD to 917 bps. Biggest contributor to relative strength was developed Asia-Pacific (IPTA) and China-linked (CNI) exposure: The IPOX Asia-Pacific Strategy (IPTA), e.g., rose 0.80% to +22.57% vs. a drop of -0.78% to +6.95% for benchmark MSCI Asia-Pacific. Strength in pan-Asian property developers including Swire Properties (1972 HK: +1.18%) and the Macau-domiciled Casinos including Sands China (1928 HK: +3.01%) or SJM Holdings (880 HK: +4.30%) contributed to the good showing. The IPOX U.S. Strategies closed the week in line: Amid a big decline in the Russell 2000 (RUT: -4.07%) motivated by a huge plunge in above-mentioned names, the narrower and large-cap centric IPOX U.S. 30 (IPXT: -2.30%) beat the broader IPOX U.S. 100 (ETF: FPX) by 77 bps. We note a new post-IPO high in takeover candidate Teradata (TDC US: +3.19%) after earnings and note another week of big strength in the IPOX China A Share Strategies.

· Most significant IPOs launched (Week 04/30/12): 11 Global IPOs priced with the average (median) IPO gaining +15.03% (+8.45%), all pricing in line with expecations.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.