IPOX Schuster LLC


IPOX Global Indexes Weekly Review for 06/06/2008

English Version

Chinese Version

Some notable events during last week:

1) IPOX Global Indexes fall: The IPOX Global Indexes fell on the week, with IPOX Europe and IPOX U.S. outperforming local benchmarks, while IPOX China underperformed. Divergence in cross-sectional performance in the underlying 2303 company-strong IPOX Global Composite Index continued to be wide, with select solar energy and materials companies rising substantially (Ersol Solar Energy: +65.17%). Exposure into large/mega cap European utilities (Electricite de France, Gaz de France) supported index spreads across the applicable IPOX Global Indexes, with the IPOX-30 Europe Index (IXTE) having now outperformed the benchmark Dow Jones STOXX 50 Index (SX5P) by 1216 basis points over the past 12 months. At the same time, SX5P records an annualized 10 year price performance of -1.02% (IXTE: + 4.92% p.a.), underlying the strongly negative performance of European blue chips over the past 10 years relative and absolute.

2) IPOX Sector breakdown, IPO activity and the growth of economies: With a sector weighting of 31.81% (using GICS), Utilities make up the biggest sector allocation in the IPOX Europe 30 (IXTE) and broader IPOX Europe Indexes (JP Morgan IPOX Europe 50 Index – IPXUJPEU). At the same time, Information Technology has no weighting in the IPOX Europe Sub-Indexes. Contrary, Information Technology is the biggest sector in the IPOX-30 U.S. and IPOX-100 U.S. Index (weights of 32.32% and 28.63%, respectively), while the allocation to the U.S. utilities sector in IPOX U.S. is negligible.

3) IPOX Latin America reverses course, plunges – OGX Petroleo e Gaz SA nears listing as Merrill withdraws from IPO consortium: The IPOX Latin America Indexes plunged last week, strongly underperforming benchmarks, driven by weakness in global exchanges stocks – notably CME - which spread into the Brazilian exchanges sector with Brazilian exchange operators Bovespa and BMF each dropping more than 13%. At the same time, recently positive momentum in JBS (-14.96%), now the world’s largest meat producer, reversed after reports of sharp drops in profits at Smithfield (its pending US based hog producer). Amid the strong sentiment for Brazilian energy stocks, USD 33bn OGX - the oil and gas explorer - plans to sell up to 15% of the company in an IPO this week. At the same time, Merrill Lynch withdrew from the consortium of underwriters after disagreeing on price of the company, which has yet to declare revenues and profits.

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