The IPOX® Week, December 10, 2018

  • Big U-Turn in global equities/tech leaves IPOX Indexes sharply lower on the week.
  • IPOX Market Neutral gains, Europe & Asia Portfolios near all-time highs.
  • IPO Deal-flow Review & Outlook: Largest VC-backed U.S. biotech IPO in history flops. Tencent Music Entertainment (TME US), ClubMed operator (1992 HK) lined up for debut. Lyft, Uber file for IPOs.

Big U-Turn in global equities/tech leaves IPOX Indexes sharply lower on the week. Amid lower U.S. bond yields, an inverted U.S. yield curve, relatively solid U.S. employment numbers and more jitters about global trade, the IPOX Indexes followed global equities/tech to perform a big U-turn from the previous week’s big gains, ending the week with significant losses. In the U.S., for example, the IPOX 100 U.S. (IPXO) conceded the 3000.00 mark anew, dropping -4.92% to -4.98% YTD. Declines extended to other global regions, with the IPOX International (IPXI) and IPOX Europe (IXTE) notably outperforming their respective benchmarks. Amongst IPOX portfolio holdings, high-beta U.S. small- and mid-cap growth exposure was particularly hit hard, including health care technology provider HealthEquity (HQY US: -22.90%), mass merchant Ollie’s Bargain (OLLI US: -22.11%) or car vending machine operator Carvana (CVNA US: -17.48%). Firms including Chinese car e-commerce platform operator Uxin (UXIN US: 42.25%), Chinese infrastructure play China Tower (788 HK: 6.90%), Japan’s specialty pharma SanBio (4592 JP: 5.07%) or U.S. social networker Match (MTCH US: 4.07%) gained against the trend. Amid the big swings, we note a good week in the IPOX Market Neutral with the portfolios centered around Asia-Pacific and European exposure gaining to trade near all-time highs, while the United States traded unchanged on the week.

IPOX® 100 U.S. Investing with the ‘FPX’ ETF since 2006

Select IPOX-linked investment products performance: Following the the big declines in global stocks, the IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) dropped by -4.73% to -4.45% YTD last week, while the IPOX International (IPXI)-linked “FPXI” ETF extended its loss to -11.29% YTD. Amongst the range of actively managed IPOX-linked products, the Catalyst IPOX® Allocation Fund (OIPAX) fell -4.16% to finish 0.00% YTD last week.

Select IPOX® Indexes Returns (%) Last Week 2017 2018 YTD
IPOX® Long-Only: Global/International
IPOX® Global (IPGL50) (USD) -3.66 28.59 -9.01
IPOX® International (IPXI)* (USD) -2.08 37.80 -11.47
IPOX® Long-Only: United States
IPOX® Composite U.S. (IPXC)* -5.05 33.64 -3.55
IPOX® 100 U.S. (IPXO)* -4.92 26.04 -4.98
IPOX® 30 U.S. (IPXT) -4.64 26.63 -6.23
IPOX® Long-Only: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) -2.00 19.27 -11.19
IPOX® Nordic (IPND) (EUR) -1.46 17.91 -13.79
IPOX® 100 Europe (IPOE)* (USD) -1.83 41.77 -14.95
IPOX® Long-Only: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) -1.94 23.30 -1.31
IPOX® China (CNI) (USD) -5.27 37.67 -19.46
IPOX® Japan (IPJP) (JPY) -2.53 N/A N/A
IPOX® Market Neutral (Long-Short)
Beta Neutral Strategy: Yes No
IPOX® Market Neutral Asia-Pacific** X 11.47
IPOX® Market Neutral Europe** X 18.78
IPOX® Market Neutral U.S.** X 7.31
IPOX® Market Neutral Global** X 10.29

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures [Symbol: IPOZ8]. ** Live since 03/18.

IPO Deal-flow Review & Outlook: Largest VC-backed U.S. biotech IPO in history flops. Tencent Music Entertainment (TME US), ClubMed operator (1992 HK) lined up for debut. Lyft, Uber file for IPOs. A total of 10 firms debuted last week across accessible global regions, with the average (median) equally-weighted company losing -1.01% (-3.35%) based on the difference between the final offering price and Friday’s close. In the U.S., the biggest IPO in biotech history, low-float VC-backed biotech startup Moderna (MRNA US: -19.13%) dropped more than $ 1.0 billion on its $7.5 billion initial valuation. Meanwhile, early stage biopharma Synthorx (THOR US: +14.64%) rose on debut. Outside the U.S., mobile game publisher unicorn iDreamSky (1119 HK: -10.00%) and property manager spin-off Kaisa Property (2168 HK: -2.99%) both fell based on offer. We also note the great debut of British investing platform operator small-cap AJ Bell (AJB LN: 37.50%). Firms lined up to IPO this week include Tencent’s music unit Tencent Music Entertainment Group (TME US). The IPO can give the firm a $24.5 billion valuation, equivalent to its strategic partner/competitor Spotify (SPOT US: -0.78%). We also note the IPO of ClubMed operator Fosun Tourism (1992 HK), as well as the U.S. IPO filings of Lyft and Uber.

Select IPOs traded (week: 12/3/2018) Domicile
AJ Bell PLC Britain
iDreamSky Technology China
Moderna Inc United States
Synthorx Inc United States
Select IPOs expected (week: 12/10/2018) Domicile
Fosun Tourism Group China
Tencent Music Entertainment Group China

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