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GLOBAL IPO: Amid Declines In U.S. Small-caps, IPOX Strategy Indexes Extend Historic Run !!!


The powerful momentum in U.S. and international large-caps powered the IPOX Strategy Indexes to yet another big week relative to the benchmarks. Despite renewed declines in U.S. small-caps, initial pricing action in U.S. IPOs in specialty technology continued at a strong pace.


· IPOX Strategy Indexes unaffected by weakness in U.S. small-caps:Despite a sharp decline in U.S. small-caps with the Russell 2000 (RUT: -2.96%) falling for a fourth consecutive week, the IPOX Strategy Indexes closed out the week higher, with the IPOX Global 50 (IPGL50) rising by +1.70% to +18.33% YTD. The index extended the relative YTD gain vs. benchmark MSCI World (MXWD) by a massive +168 bps. to +752 bps. (Relative) gains extended across the IPOX Regional Strategy Indexes universe: In the United States, the IPOX U.S. IPO and spin-off ETF (TICKER: FPX rose +0.41% to +16.90% YTD, with spreads vs. benchmark Russell 3000 (ETF: IWV extending to +758 bps. The IPOX Europe universe rose slightly with the IPOX Europe 50 (IPXUJPEU) gaining +0.29% to +9.61% YTD. Most contribution to strength in IPOX Global was driven by index members domiciled in Asia-Pacific and Latin America with the IPOX Asia-Pacific 30 (IPTA) rising +1.81% to +19.04% YTD, outperforming benchmark MSCI Asia-Pacific (MXPC) by +216 bps. Upside focus within IPOX Emerging Markets remained on the big relative momentum in the IPOX Latin America universe (IPXULATT: +1.54% to +29.30% YTD) with the portfolio extending its relative gain vs. benchmark MSCI Latin America (MXLA) to +948 bps.

· In Individual equities, IPOX heavyweight AIA Group (1299 HK: +3.18%) rose ahead of a big divesture announcement by parent AIG (AIG: 4.89%), while Columbian Oil group Ecopetrol (EC: +4.28%), fashion groups Prada (1913 HK: +4.26%) and Michael Kors (KORS: +15.51%) or U.S. pipeline operator Kinder Morgan

(KMI: +9.81%) extended their run in uncharted territory. Resources/Energy-linked stocks including miner Glencore International (GLEN LN: -3.74%), Concho Resources (CXO: -5.77%), Eurasian Natural Resources (ENRC LN: -5.41%), Continental Resources (CLR: -5.80%) or MEG Energy (MEG CN: -2.00%) fell. We note the continued decline in 2011 key Hong Kong IPO jewelry retailer Chow Tai Fook (1929 HK: -3.83%) which has underperformed the Hong Kong market by a big 30.41% since its December 14, 2011 IPO. October 2010 key European IPO, global jewelry retailer Pandora A/S (PNDORA DC: -1.72%), closed last week 63.86% below its offering price.

· Most significant IPOs launched (week 02/27/2012):

Company Ticker Return / IPO (%)
Sunshine Oilsands Ltd 2012 HK -3.29%
Yelp Inc YELP US +63.87%
Jiangsu Wutong 300292 CH +79.42%
Guangzhou Canudilo Fashion 002656 CH +20.72%
Home Loan Servicing Solutions HLSS US -1.71%
Panjawattana Plastic PCL PJW TB +20.00%
Sinodata Co Ltd 002657 CH +77.59%

7 IPOs launched last week in the global regions with the average (median) IPO gaining a strong +36.67% (+20.72%). With mainland China IPOs jumping, U.S. focus was on the big debut of social networker Yelp Inc. (YELP US: +63.87%) raising more than originally expected and benefiting from indiscriminate demand for U.S. IPOs in specialty industries. Hong Kong IPOs continued their lackluster showing with Sunshine Oilsands (2012 HK: -3.29%) closing below offer.

· Week Ahead (03/05/2012): IPOs scarce

Company Code Country Lead Manager
Argos Therapeutics ARGS US U.S.A. Canaccord
China Putian Food 1699 HK H.K. CMSHK
Nationstar Mort. NSM US U.S.A. CITI, CS, WFC

Despite weakness in U.S. small-caps, the powerful market momentum in the Nasdaq-100 (NDX) and S&P 500 (SPX) should support this week's few U.S. deals. Ahead of the Facebook IPO, we expect demand for U.S. deals to continue to outpace demand for IPOs on other international markets.

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