Some notable events from the week of 05/16/08:
1). Market catches up to IPOX Global. After consolidating during the previous week, the IPOX Global Indexes rose last week, driven by continued strength in energy, industrials and global mining companies, with Eurasian Natural Resources (ENRC LN) — currently the subject of continued takeover and merger rumors — leading the way amongst large/mega cap companies.
2). The Dec. 2007 London IPO has now gained 63.2% since inclusion in the IPOX-30 Global (All Markets) Index (IPGL30) in the March rebalancing with Blackrock (BLK US) amongst one of its biggest institutional shareholders. Global Solar and Alternative Energy companies continued the record on the back of surging oil prices and indiscriminate momentum enforced by from surging asset levels in ETF’s and funds solely focused on this space. Candidates here include First Solar (FSLR US) which has been trading at record levels earlier than other companies. June 2004 IPO and long-run HK traded IPOX constituent Tencent (700 HK) rose by 16.23% on the week after the announcement of strong earnings and the inclusion of the company in the Hang Seng Index in June. The company is scheduled to exit the IPOX universe during the course of the rest of the year. The biggest relative weakness is to be reported form the IPOX Asia-Pacific universe (captured in the IPOX-30 Asia-Pacific Index), which fell by around 430 basis points versus the Topix Index on the week, its biggest move in 2008. Drivers of relative weakness include casino operator Melco (MPEL US) and Japanese banking stocks Aozora (8304 JP) or Seven Bank (8410 JP), suffering on the back of a decreasing likelihood of a quick outcome re: shareholder activism in Electric Power Development (9513 JP), another IPOX constituent.
3). “Do IPO Index Portfolios Improve the Investment Opportunities for Mean Variance Investors?” In a recent non-sponsored and independent study, Prof. Hsuan-Chi Chen (Anderson School of Management, University of New Mexico) and Prof. Keng-Yu Ho (National Central University, Taiwan) examine whether investors can improve their investment opportunity sets through the addition of an IPO index portfolio into various sets of benchmark portfolios for the US market between 1980–2006. Using the IPOX Indexes, they find that adding IPOX does lead to a statistically significant enlargement of the investment opportunity set for investors. The study is available here:
4). Focus US: IPOX U.S. Indexes go positive: ETF (Ticker: FPX) trading volume surges: The IPOX U.S. Indexes have become the first U.S. growth indexes clearing the positive YTD performance mark on the week, driven by diversified exposure into new (global) growth sectors (Alternative Energy, Materials and Industrials) and exposure into solid large caps (spin-offs) rising after reporting exceptional earnings. While the more concentrated IPOX-30 U.S. Index has closed at a NEW ALL TIME HIGH, the broader IPOX-100 U.S. Index trades close to several key technical levels made last year. The IPOX-100 U.S. Index currently captures USD 562.35 billion of applied market capitalization created through IPO and spin-off activity during the past four years. It has delivered strong relative and absolute returns and has displayed powerful trading dynamics over the past years, underlying its potential use as an asset allocation tool discussed above.