Markets shun newly public stocks this year

New York: Last week's battering of the stock markets not only slammed companies once thought of as stable, blue-chip stocks, such as financials.

The market were also merciless toward the stocks of newly public companies, as investors fled to the safest securities they could find, further putting off the long awaited recovery of the initial public offerings market.

So far this year, according to IPO Index, a benchmark by Connecticut-based research firm Renaissance Capital that tracks US IPO's from the past 24 months, IPO stocks are down nearly 29 per cent. That compares with the Standard and Poor's 500 decline of nearly 15 per cent year to date. A week ago, the IPO Index was down only 25.3 per cent.

"Investors found it safer to throw them out and move to higher ground," said Kathleen Smith, chairwoman of Renaissance Capital, of the battered IPO stocks.

Newly public stocks are typically more volatile than the broader market because there are relatively few of their shares in the market and because of investors' lack of familiarity with them.

The current year has only seen 30 IPOs in the United States launch, raising $26.7 billion in proceeds, making it the slowest IPO market in five years, with only about a quarter of the activity at this point last year, according to Thomson Reuters data.

Of those 30 new issues, only six have had positive returns since their launch.

Two of those top performers, credit card operator Visa Inc, up 58 per cent since its March debut, and risk consultant RiskMetrics Group Inc, once a unit of JP Morgan Chase and Co and up about 39 per cent since January, were already well known to investors.

Among the most volatile stocks has been GT Solar International Ltd, the maker of solar equipment, which launched a $500 million offering in July. On Friday, it was down about 28 per cent from its launch but had been down as much as 48 per cent earlier in the week.