Equities yield to weak U.S. small and mid-caps; IPOX Indexes consolidate, most fall less than markets. Amid continued momentum-driven weakness in U.S. small- and mid-caps (with the Russell 2000 [RTY] declining to +1.26% YTD), mixed earnings and heightened geopolitical uncertainty driving a big jump in global risk (VIX: +54.64%), the IPOX Indexes fell last week, with the IPOX Global 50 (IPGL50) – benchmark for the performance of the largest New Listings in the global regions using the IPOX® Indexes Technology – declining by -1.28% to +17.73% YTD, better than when compared to the global market. Within the IPOX Indexes Universe, the IPOX U.S. Indexes (IPXC, IPXO, IPXT) traded as the worst performing IPOX Regional Indexes group, while the IPOX Asia-Pacific (IPTA) finished the week almost flat-lined and the IPOX China (IPXUCHCP, CNI), IPOX Europe (IXTE), and IPOX International (IPXI) closed the week with strong relative performance gains.
Individual companies in focus: Amid more earnings and (perceived) corporate action activity, individual portfolio holdings in focus included U.S.-traded online furniture seller Wayfair (W US: -13.28%), U.S. social networker Snap (SNAP US: -12.50%), China domiciled delivery firm ZTO Express (ZTO US: -9.18% – after earnings and ahead of earnings of BABA US [08/17] and JD US [08/14]) or Patrick Drahi’s cable & satellite services provider Amsterdam-based Altice (ATC NA: -7.93% – on rumors that the firm is lined up to bid for much bigger CHTR US). Significant upside was recorded by Chinese online car seller Autohome (ATHM US: +28.65%), Chinese social networker Meitu (1357 HK: +16.64%), European payment processor London-traded Worldpay (WPG LN: +9.78% – gaining in tandem with acquirer VNTV US) or U.S. traded luxury pet food maker 07/2015 IPO Blue Buffalo (BUFF US: 9.87%) whose shares regained lost ground after reporting strong quarterly results which included a share buy-back announcement.
|IPOX Price Returns (%)||Last Week||Q2 2017||YTD 2017|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||-1.28||5.54||17.73|
|IPOX Global (IPGL30)||-1.29||8.07||18.69|
|IPOX International (IPXI)*||-.072||9.24||29.00|
|Exposure: United States (USD)|
|IPOX Composite U.S. (IPXC)*||-1.83||7.44||18.62|
|IPOX 100 U.S. (IPXO)*||-1.72||3.86||9.76|
|IPOX 30 U.S. (IPXT)||-2.02||4.62||10.65|
|Exposure: Europe/Nordic Region (EUR)|
|IPOX Europe (IXTE)||-1.31||4.95||17.49|
|IPOX Nordic (IPND)||-1.72||8.64||14.53|
|Exposure: Asia-Pacific/China Region (USD)|
|IPOX Asia-Pacific (IPTA)||-0.13||2.99||14.21|
|IPOX China C. (IPXUCHCHP)*||-1.21||10.06||28.28|
|IPOX China (CNI)||-1.16||4.62||22.93|
* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOU7]).
IPOX-linked ETF performance update: Last week, the IPOX 100 U.S. (IPXO)-linked USD million 832 First Trust US. Equity Opportunities ETF (FPX) fell to +10.26% YTD, while the younger USD million 17 IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) fell to +31.64% YTD. The NYSE-traded “FPX” ETF and NASDAQ-traded “FPXI” ETF provide a granular global solution to the “going public” effect associated with the largest, most liquid and best performing New Listings (IPOs and Spin-offs) domiciled in the U.S. and trading on a U.S. market (“FPX”) and domiciled outside the U.S. trading on an accessible global exchange (“FPXI”).
Global Deal-flow Review and Outlook: Strix stands out in uneventful week, deals in Africa & Middle East in focus. 9 notable accessible global (non-China A shares) firms debuted last week, with the average (median) equally-weighted stock gaining by +4.47% (+0.17%) based on the difference between the final offering price and the Friday’s close. UK’s industrial products maker Strix Group (KETL LN: +33.50%) stood out as the week’s best performing deal and underlying continued solid demand for specialty deals in the region, while IPOs in the U.S. (RNGR US, YOKA US, ZEAL US) debuted mixed. Focus during the upcoming week is on IPOs in Africa & The Middle East, including telecom carrier and fully subscribed Vodacom Tanzania (VODA TZ).
|Traded IPOs (week of August 7, 2017)||Country|
|BGMC International Ltd||Malaysia|
|Empresas Tricot SA||Chile|
|Golden Faith Group Holdings Ltd||Hong Kong|
|Ranger Energy Services Inc||United States|
|Strix Group Plc||Britain|
|Triple Point Social Housing Reit PLC||Britain|
|Vista Oil & Gas SAB de CV||Mexico|
|YogaWorks Inc||United States|
|Zealand Pharma A/S||Denmark|
|Upcoming IPOs (week of August 14, 2017)||Country|
|Al Ahlia Insurance Co. SACO||Oman|
|Investment Holding Group||Quatar|
|Vodacom Tanzania Ltd.||Tanzania|
|Wilmcote Holdings Plc.||Britain|
Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.
ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.
Disclosure: the author has no position in the stocks mentioned.
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