Made in China: Year-End Breakout IPOs

SAN FRANCISCO -- It's feast and famine in the U.S. market for IPOs -- a feast of new issues, but a famine for those looking for big first-day or first-month upside.

For a more substantial meal, investors may do well to look at China.

Roiling markets were tough on new U.S. issues in November. Portfolio managers beset by falling fund values have lost focus and aren't concentrating on new issues the way they usually do, according to Ben Holmes, publisher of MorningNotes.

Part of the problem was the sheer number of deals. Some 30 new issues priced in November, compared with 23 the month before. With the onslaught, gains on November IPOs fell short, at 6.2% as of Monday, according to MorningNotes data.

That's a big disappointment following October's average gain of 27.2%. The weak showing ended a five-month streak of double-digit first-month average gains.

Even secondary public offerings actually saw first-month declines for the first time in at least two years.

Some new issues, like Internet Brands(INET), struggled just to get out the door, offering no first-day upside to shareholders.

"The major question is whether the recent trend of postponement will continue," says Scott Sweet, managing director of IPO Boutique. "The pipeline is full. Underwriters would like to get these deals out as soon as possible, given the market environment and credit scenario."

So where to look for upside in December? China, of course. Some ADRs coming to U.S. exchanges hold breakout potential -- with caveats.