This Week in Global IPOs: Optimal Start to Developed Markets New Issues Cycle

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Includes: FPX, GM, MA, MMYT, SFUN, TSLA, V
by: Josef Schuster

SUMMARY

The IPOX Indexes finished Futures and Option expiration week with strong gains across the board, with selected IPOX indexes continuing to outperform strongly. The new developed markets IPO cycle starts spectacularly. Focus on the managed IPOX-linked long-short strategy.

HIGHLIGHTS

IPOX Indexes Action:

  • With key F&O option expiration offering the forecasted support, the IPOX Indexes rose across the board.
  • The IPOX Global 100 Index (IPGL100) added +1.84%, outperforming benchmarks S&P 500 (SPX) and MSCI AC World (MXWD) by 39 and 24 bps, respectively.
  • 76/100 companies in IPGL100 finished im Plus, with the average (median) equally-weighted stock gaining +2.13% (+1.33%), more than the applied market-weighted index.
  • In IPOX Global Sectors, focus remained on constituents in the IPOX Global Consumer Discretionary (+3.04%) Sector, as key HK-traded constituents recorded new highs.
  • Last week’s global payment processor “suspect” corporate action trade Visa (NYSE:V) (+0.43%)/Mastercard (NYSE:MA)(+6.13%) vs. Redecard (+1.24%)/Cielo (-4.86%) normalized as Mastercard announced a USD 1bn stock buy-back.
  • In the IPOX Regional Indexes, upside focus remained on the strong relative performance of the IPOX 100 U.S. (FPX: +2.12%) and the big surge in the IPOX 30 Asia-Pacific Index (IPTA: +3.71%), as key consumer/casino stocks L’Occitaine (+11.73%), SJM (+11.61%) or Wynn Macau (+8.51%) continued to advance.

IPOX-linked Global Long/Short Strategy [DXIIX]: Powerful Properties

Table 1: IPOX Global Long/Short [DXIIX] - (Beta and Correlations)

Beta
Ticker
MXWD
DXIIX
SPX
TFSMX
1.00
MXWD
1.00
-0.36
0.88
0.86
0.18
DXIIX
-0.36
1.00
-0.49
-0.45
1.00
SPX
0.88
-0.49
1.00
0.91
0.55
TFSMX
0.86
-0.45
0.91
1.00

Initial Action in global IPOs:

Table 2: Key Global IPO Pricings (last week)

Company
Ticker
Return over IPO
Hyundai Home Shop
057050 KS
+39.44%
Dawonsys Co Ltd
068240 KS
+7.73%
Fuhrmeister
3165 JP
-0.10%
China Sanjiang Fine
2198 HK
-4.14%
KTCS Corp
058850 KS
+0.00%
Formetal Co Ltd
119500 KS
+9.33%
SouFun Holdings
SFUN US
+70.94%
  • 14 (non China A Share) global IPOs debuted last week, with the average (median) IPO gaining +24.95% (+10.92%). Developed markets focus was on the earlier-than-expected debut of China SouFun Holdings (SFUN: +70.94%), which priced on top and rose spectacularly.
  • A further seven China A Share IPOs debuted: As domestic China looks notably weak, the average (median) IPO return declined to +36.62% (+34.34%),

Upcoming global IPOs:

Table 3: Global IPO Deal Flow expected (week)

Company
Ticker
Trading Day
Changfeng Axle China Co
1039 HK
24/09/2010
Magic Holdings Int. Ltd
1633 HK
24/09/2010
Microport Scientific Corp
853 HK
24/09/2010
SciQuest Inc
SQI US
24/09/2010
  • With SouFun (SFUN US) providing for a most optimal start to a new Developed Markets IPO cycle, a further four small-cap IPOs are scheduled for the coming week:
  • Based on positive feed-back/momentum from generally strong showings in recent Korean/U.S. small-cap IPOs, we expect a positive initial reaction to the three HK IPOs.
  • U.S. focus in on small-cap SciQuest Inc. (SQI US): The company seeks its second IPO in 11 years, with around 50% of the expected proceeds used to redeem preference shares.

Disclosure: DXIIX, FPX or other IPOX Indexes may be long or short respective stocks.