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Some notable events during last week:
 
1) IPOX Global Indexes underperform, spreads to US benchmarks plunge: The IPOX Global Indexes underperformed last week as spreads versus the main US indexes suffered one of the biggest drops on record, driven by a fundamental shift into US (and - tech- USD) (and away from emeging markets) assets on the back of receding commodity (oil) prices and political uncertainty over Russias conduct. The de-coupling in global equity markets return patterns is interesting, as China (and related H-shares) has continued to trade lower on US strength overnight. In individual large/mega-caps, global energy/materials stocks suffered most with IPOX heavyweight OAO Rosneft Oil (-16.25%), Kazakmys (-14.87%) or China Shenhua Energy (-13.66%) recording doube-digit losses. The US portion fared better with Philip Morris (PM) reaching a new post spin-off high. While IPOX Latin America Indexes fell sharply, the IPOX China Indexes and IPOX China A Shares Indexes continued to trade in line or overperform the local benchmarks.
 
2) Global IPO activity slow, latest US offerings produce negative initial returns: Some of the more notable US IPOs during the past weeks include Rackspace (RAX), GT Solar (SOLR), China Mass Media (CMM) or China Distance Learning (DL). All companies recorded a negative initial return and continued to trade below the offering price in aftermarket trading. Abroad, Maaden (MAADEN AB), a USD 7bn Saudi Arabian Mining Company, continuing the string of larger scale IPOs in the Arab World, saw the share price fall 20% based on the first close, still trading above the offering price.

IPOX-100 U.S. (USD) (P)

Share Change effective at the open of business 07-Aug-2008 Genco Shipping & Trading Ltd (GNK.N) due to company Equity offering. Shares outstanding will change from 29078000 to 31796000.

Fortress Investment Group (FIG), notably the first US hedge fund going public in February 2007, plunged to new lows today, after Citigroup – currently a 2.63% shareholder in the company - issued a ’sell’ rating. The company with a market cap of USD 29bn based on its first close, is not an IPOX Global Indexes constituent as its initial return of 67.6%  surpasses the IPOX entrance requirements. The company falls into the category of large-cap IPOs (with Fidelity Investments as one key accumulator of shares in immediate aftermarket trading) which have seen the stock soar on the first day, beyond “rational” levels. Similar companies are suffering FIG’s fate of high initial returns and strong underperformance in aftermarket trading: Examples include VM Ware (VMW), Chipotle Mexican Grill (CMG), Under Armor (UA) or Las Vegas Sands (LVS).

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Chinese Version

Some notable events during last week:

1)     IPOX Global Indexes unchanged, large moves in individual securities have little impact on overall performance: The IPOX Global Indexes traded unchanged on a weekly basis, outperforming the MSCI World Index (MXWO), while slighlty underperforming the S&P 500 (SPX). There was substantial dispersion in individual securities’ returns, with previous weeks losers (such as miners KAZ LN or ENRC LN), becoming last week’s winners. Investors sold stocks of companies meeting or beating analyst’s estimates such as shares of global payment processer Mastercard (MA) (-9.97%). Global Exchange operators retreated anew, led by NYX (-12.82%). Returns dispersion in the underlying IPOX Global Composite was large, with the average equally-weighted constituent losing 0.17% (median: -0.65%).
 
2)     IPOX Emerging Markets Focus: Most emerging markets action was in Turkish constituents, after a constitutional court refjected the closure of the Justice and Development party (AKP), supporting companies such as Turkiye Halk Benkase AS (+29.46%) or Turkiye Vakiflar (+39.78%). Russia’s Mechel Steel Group (-22.71%), like other Russian companies, continued to retreated in the aftermaths of the previous week’s events involving state official’s comments. Latin Amercian IPOs and spin-offs contineud to slightly outperform local benchamrks MSCI Latin America (MXLA) and the Bovespa (IBOV), as OGX (+12.36%) rose, supported by a UBS buy recommendation with a target more than double the current share price.