initial public offerings (IPOs) trading on American exchanges

Friday, July 1, 2011

Trading new IPOs

Making its market debut in May 2011, Glencore’s initial public offering was the largest ever IPO on the London market. However its performance was ultimately disappointing and its shares struggled to move beyond its widely expected launch price of 530 pence. Joshua Raymond, Chief Market Strategist at City Index (, considers the merits of speculating on new IPOs:

“New IPOs can also be very hard to read,” states the spread betting expert. “Technically, you simply cannot entertain any technical analysis on prices as there is no historical price action to help determine future price trends. This means that one will most likely be basing research on fundamentals, which may not necessarily be everyone’s expertise.”

That said, some new IPOs can be fruitful for traders. Mr. Raymond continues: “One of the most recent and tremendously successful IPOs is that of fashion retailer Super Group, owner of the Super Dry brand. The retailer launched an IPO in March 2010 at a launch price of 502p. By February this year, share prices hit a new record high of 1898p, rallying some 278% in the space of just 11 months trading as a publicly listed company.”

“But it has not all been one way, and recently its share price has fallen by some 45% from its February highs, proving just how volatile new IPOs can be and why timing can be everything.”

Keep up with the latest market movements and financial news from the trading floor of City Index at:

No comments:

Post a Comment