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The IPOX Week (10/10/2011): First notable U.S. IPO for Q4 lined up !!!

SUMMARY

Equities gyrated anew but finished the week well supported, driven by another string of positive U.S. economic indicators and firmer Asia with IPOX performing strongly. With China closed, global IPO activity remained subdued with key deals falling below offer. Busier week for global IPOs ahead.

HIGHLIGHTS

·         Global equities closed the week well supported, as the positive sentiment from a string of good economic U.S. indicators and a solid week in U.S. technology and U.S. small-caps outweighed the day-to-day negative news flow related to European debt and Financials. Stronger Asia, in particular China-related stocks, supported after continuing to plunge early in the week.
·         In the United States, the IPOX U.S. Indexes once more showed power with the IPOX U.S. 30 Index (IPXT) reducing its YTD loss to -4.72%, beating most of the benchmarks with a +2.60% gain on the week. The index was helped by strong week in IPOX heavyweight General Motors (GM: +9.07%) which is building positive momentum on good fundamentals and encouraging technicals 11 months after its IPO. Upward momentum in the index was also re-enforced by another great relative week in key U.S. traded consumer staples with takeover candidates Lorillard (LO: +4.74%) reaching a fresh all-time high and nutrition maker Mead Johnson (MJN: +3.40%) rallying.
·         In Europe, the IPOX Europe Indexes traded in line to lower versus the benchmarks, with the IPOX Europe 30 (IXTE) rising +2.53% on the week with IPOX heavyweight commodity trader Glencore International (GLEN LN: +4.74%) rallying strongly.    
·         In Asia, the IPOX Asia-Pacific 30 (IPTA) had a tumultuous trading week and closed the week with a gain of +1.43%. Focus was on the Macau-traded casino complex with Wynn Macau (1128 HK: +7.83%), Sands China (1928 HK: +6.87%) and SJM (880 HK: -7.80%) in large ranges. IPOX pick and September addition AUD 2.6bn Australia's Treasury Wine Estates (TWA: +1.81%) rose to a new post spin-off high. Small- mid-cap Japanese IPOs, including IPOX pick snack producer Calbee (2229 JP: +1.30%) traded near post-IPO highs during the week. With the big bounce in Macau-casino stocks and continued strength in the IPOX Japan and IPOX Australian universe, the IPOX Asia-Pacific 30 (IPTA) remains a massive +863 bps. and +1757 bps. ahead of benchmarks MSCI Asia-Pacific (MXPC) and Hong Kong's Hang Seng (HSI) YTD.
·      IPOX Emerging Marketsclosed well supported, ahead of the benchmarks. Notable is the strength in the IPOX Latin America (IPXULATT) universe, which beat benchmark MSCI Latin America (MXLA) by 246 bps.
·      IPOX Korea 30 now live: Please note the launch of the IPOX Korea 30 (IPXK30K) tracking the aftermarket performance of the burgeoning Korean IPO market, the 4th largest in terms of number of IPOs since 2010.
·      The bounce in Emerging Markets helped the IPOX Global 30 Index (IPGL30) to outperform its benchmarks substantially:  The index rose 3% to -12.84% YTD.

Key IPOX Strategies Returns YTD:
Ticker (BBG/Reuters)
Return
Week (%)
Return
YTD (%)
Name
IPGLC (NYSEARCA:USD)
+1.17
-19.83
IPOX Global Comp
IPGL100 (USD)
+2.02
-13.80
IPOX Global 100
IPGL50 (USD)
+2.01
-14.00
IPOX Global 50
IPGL30 (USD)
+3.00
-12.84
IPOX Global 30
IPXULSU (USD)
-0.65
-6.38
IPOX Global L/S
IPXO (USD)
+2.21
-6.85
IPOX U.S. 100
IPXT (USD)
+2.60
-4.72
IPOX U.S. 30
IXTE (EUR)
+2.53
-18.01
IPOX Europe 30
IPTA (USD)
+1.43
-8.39
IPOX Asia-Pac. 30
IPXUEM (USD)
+0.46
-27.26
IPOX Emerging Mkts.
IPXUBRIC (USD)
+2.19
-35.46
IPOX BRIC 25
IPXUCHCP (USD)
+1.24
-31.55
Chin IPOX Comp.
CNI (USD)
+1.13
-32.72
China IPOX 20
IPXUCAUP (USD)
closed
-18.46
China IPOX Comp.
IPXULATT (USD)
+4.85
-24.42
IPOX LatAm 20
IPXK30K (KRW)
-2.67
-4.83
IPOX Korea 30


Most significant IPOs launched (Week 10/03/2011):   
Company
Ticker
Return / IPO (%)
CITIC Securities Co Ltd
6030 HK
-6.77
Puregold Price Club Inc
PGOLD PM
-12.32
BSB Bancorp Inc/MA
BLMT US
1.70
·      Just three global IPOs started trading, with the average (median) IPO falling -5.8% (-6.8%) on the week. The price decline in Asian IPOs is reflective of the impact of the spike in volatility during the 7 day window between the respective pricing day and commencement of trading.  
·      Week ahead: 1 U.S. deal, 3 Korean deals lined up:

Company
Code
Country
Lead Manager
Daihan Scientific
131220 KS  
Korea
Daewoo  
Robostar Co Ltd
090360 KS  
Korea
Mirae Asset  
Chanceton Fin.
8020 HK  
H.K.
EVERBR 
Ubiquiti Networks
UBNT US  
U.S.
DB, RJA
Nexolon Co Ltd
110570 KS  
Korea
Woori  
Notable is the launch of three small-cap IPOs in the Korean market, underlying its relative strength. U.S. focus is on Ubiquiti Networks (UBNT US): The wireless equipment maker has seen steady revenue increases since 2009. While we expect the company to do well initially due to its small offering size, the small % of equity offered (7.85%) points to "GM like" overhang for long-run investors into this private equity backed company.