Some notable events during last week:
1) IPOX Global Indexes stable to higher – tracking or ahead of benchmarks: The IPOX Global Indexes continued to trade in line to higher across the IPOX indexes universe, with most divergence captured in the IPOX Europe universe, which outperformed benchmarks by between 250 and 370 basis points. Interesting is the development in global basic materials (KAZ LN: +15.47%, NWR: +13.58%) and global alternative energy/solar stocks (STP US: +25.07%, REC NO: +12.40%, LDK: +7.06%, FSLR: +6.76%), sectors that had recently followed the trade in crude oil and now seem to disentangle, as the market focuses on earnings/long-term fundamentals. The IPOX China universe continued to trade in line not managing to break the lows reached during the March sell-off – which is notable.
2) IPOX U.S. Breaking News: Constituents CF US and SAIC US added to S&P 500 S&P 400 Mid-Cap Indexes: S&P announced after the close of trading on Friday to add CF Industries (CF US) to the S&P 500 Index, while SAIC Inc. (SAI US) will be added to the S&P MidCap 400 Index. Both companies have been tracked by full market capitalization in the IPOX U.S. since their respective IPO, with Illinois-based CF US rising 892% (!!!) based on the first close of trading on August 11th, 2005 (with SAI US rising 8% since the October 13th, 2006 IPO). The expected “abnormal” return based on the S&P Indexes inclusion once more underlines the effectiveness of IPOX to systematically capture the performance of mid- and large-cap IPOs which have a high likelihood of being included in major benchmark indexes. Historically, IPOX has been able to capture the performance of – amongst others - GOOG US or CME US well before their respective S&P 500 Index inclusion, resulting in substantial alpha. Are Visa Inc. (V US) and First Solar (FSLR US) next?
3) Global Casino Stocks and IPOs: We continue to monitor with great interest the huge swings and divergence in performance in global casino stocks, many of which were IPOs in the past few years and many of which are current IPOX Indexes constituents. Recent downside volatility was sparked by unconfirmed reports that China intends to curb travel to Macau, mostly pressuring gaming behemoth Las Vegas Sands Inc. (LVS). At the same time, SJM Holdings Ltd. (880 HK), Stanley Ho’s gaming vehicle and “well-timed” July 16th, 2008 IPO, has fallen 25% based on the company’s IPO price.
4) Global Exchange consolidation continues as CBOE IPO filing nears and CME Groups reach extends: This week marked another intriguing chapter in the round towards global exchanges consolidation, an important part of IPO (trading) (and IPOX) activity since 2001: CME Group (IPOX constituent till 2007) closed on NYMEX (NMX) (never an IPOX constituent) at a substantial discount to its value for much of the immediate aftermarket, while the merger between last years Brazilian IPOs and exchange operators Bovespa Holding (-52% since the first close) and BMF (-59% since the first close) creates an USD 14bn exchange – almost 40% larger than NYSE Euronext with the CME Group as one of the largest single shareholders. At the same time, with legal settlements re: CBOT/CBOE legacies in reach, the CBOE is expected to follow suit with an IPO filing while up-and-winning Kansas-based BATS Group has just received U.S. exchange status and now can be expected to pursue the IPO path in due course.