May 30th, 2008
Some notable events during last week:
1) IPOX Global Indexes extend gains: The IPOX Global Indexes rose last week across the board, with both global and sub-indexes outperforming benchmarks. The IPOX-30 Global (All Markets) Index, proxy for global large/mega-cap growth sentiment, rose 235 basis points on the week, ahead of benchmarks. Ahead of the June Re-balancing of the IPOX Global Indexes, OAO Rosneft (ROSN LI) become the top constituents in a number of IPOX Indexes, including the IPOX-30 Global (All Markets) Index (IGPL30) and the IPOX BRIC 25 Index (IPXUBRIC). The USD 106bn company has risen 77.74% since its low on February 8th, underlying the momentum enforced by a) strategic shifts into Russian Equities and b) the start of trading in ROSN LI linked derivatives on Eurex.
2) With indexes showing strong gains, cross-sectional volatility and dispersion increases: With the IPOX Global Indexes rising on the week, the indexes saw substantial action when looking at index cross-section: In large/mega caps, Viacom (VIA.B) fell substantially after reporting weaker ad sales, while payment processors Mastercard (MA US) or Visa (V US) rose, driven by MA’s strong outlook, perceived to be benefiting a more challenging consumer climate. Micro-Cap Biotech Favrille Inc. (FVRL US) lost 94.33% on the week as the company discontinued development of specified products. The dispersion in cross-section returns across the 2307-name IPOX Global Composite Index was large: While the average equally-weighted constituent in the index rose 1.29%, the median company fell by 0.29%, underperforming the benchmarks.
3) JBS drives IPOX LatAm Index higher: Correlation of the IPOX LatAm 20 Index versus benchmarks Bovespa or MSCI Latin America continued to decrease, as exceptional momentum in index constituents JBS SA (JBSS3 BZ) or Banco Nossa Caixa (BNCA3 BZ) helped the index to outperform, becoming the best performing IPOX Index year-to-date (10.98%). Both companies currently undergo typical effects of ‘going public’: While JBS is becoming the world’s largest meat producer through acquisitions through debt and equity (with various US deals pending and under congressional review), Banco Nossa Caixa is at the center of takeover speculation. Both companies traded at new highs last week.