The IPOX® Week, December 11, 2017

  • IPOX 100 U.S. Index (IPXO) bounces from early losses to close out week relatively unchanged. IPOX Europe (IXTE) gains for second week.
  • Global IPO Deal-flow Review and Outlook: Most companies record initial gains / Brazil, Japan and the UAE set to debut largest IPOs YTD, respectively.

IPOX 100 U.S. Index (IPXO) bounces from early losses to close out week relatively unchanged. IPOX Europe (IXTE) gains for second week. Ahead of expiration and indexes re-balancing, the style-box agnostic, large-cap centric IPOX 100 U.S. (IPXO) closed out the week relatively unchanged, lagging the S&P 500 (SPX) while outperforming U.S. small- and mid-caps. Strong gains in select mid-caps after upgrades supported the index after losses early in the week towards the week-end, with stocks including Chicago-based online automotive platform operator Cars.com (CARS US: 12.39%), life insurer Athene (ATHN US: 8.86%) or social networker Snap (SNAP US: 8.65%) – removed consideration by the major index providers – rising strongly. Gains recorded by these firms helped to mitigate the impact of declines in health care services provider HealthEquity (HQY US: -11.15%) and software makers Coupa Software (COUP US: -9.18%) or more heavily weighted Veeva Systems (VEEV US: -5.72%). Abroad, we note another good week in the IPOX Europe (IXTE), while the plunge in South Africa’s largest IPO/Spin-off YTD- specialty retailer Steinhoff Africa Retail (SRR SJ: -31.93%) on accounting irregularities – threatens to derail the otherwise positive IPO momentum in the region.

IPOX 100 U.S. Investing with the 5-star FPX ETF since 2006:

IPOX Price Returns (%) Last Week Q3 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) -0.29 8.63 26.46
IPOX International (IPXI)* -0.01 9.49 33.65
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* -0.05 8.86 31.98
IPOX 100 U.S. (IPXO)* -0.11 7.06 24.26
IPOX 30 U.S. (IPXT) -0.43 7.99 25.93
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 1.46 5.59 19.12
IPOX Nordic (IPND) 0.27 5.17 15.87
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.69 2.85 18.61
IPOX China C. (IPXUCHCHP)* -0.25 12.29 39.26
IPOX China (CNI) -1.39 9.59 30.16

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME  listed e-mini IPOX 100 U.S. Index Futures [Symbol: IPOZ7].

Global IPO Deal-flow Review and Outlook: Most companies record initial gains / Brazil, Japan and UAE set to debut largest IPOs YTD: At least 19 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally- weighted company adding 5.03% (3.33%) based on the difference between final offer and Friday’s close. Australian IPOs were again in focus with small-cap infrastructure construction services provider Wagners (WGN AU: 25.46%) recording significant initial gains, followed by utility Gulf Energy (GULF TB: 21.67%) – Thailand’s largest IPO YTD – and U.S. traded biotech San Francisco-based Denali Therapeutics (DNLI US: 19.17%). Select IPOs in South Korea disappointed, including low-cost airline Jin Air (272450 KS: -9.28%) and cosmetics packaging company CTK Cosmetics (260930 KS: -16.36%). Focus during this week is on deals in international markets with Brazil (IPO of energy firm Petrobras Distribuidora [BRDT3 BZ]), Japan (IPO of logistics firm SG Holdings [9143 JP]) and the UAE (IPO of energy firm Abu Dhabi National Oil Co for Distribution [ADNOCDIS UH]) set to debut their largest IPOs YTD, respectively. Deals in the U.S. include Morgan Stanley-led communications equipment maker Casa Systems (CASA US) and BCG partners carve-out financial Newmark Group (NMRK US).

Select IPOs traded (week: 12/04/2017) Country
Curo Group Holdings Corp U.S.A.
Denali Therapeutics Inc U.S.A.
Gulf Energy Development PLC Thailand
Jin Air Co Ltd South Korea
National Life & General Insurance Co SAOC Oman
Sabre International Group PLC Britain
Select IPOs expected (week: 12/11/2017) Country
Abu Dhabi National Oil Co for Distribution PJSC U.A.E.
Aruhi Corp Japan
Casa Systems Inc U.S.A.
China Education Group Holdings Ltd China
Digital Hollywood Interactive Ltd China
Hebei Construction Group Corp Ltd China
Katitas Co Ltd Japan
Newmark Group U.S.A.
Nissin Foods Co Ltd Hong Kong
Panca Budi Idaman PT Indonesia
Petrobras Distribuidora SA Brazil
SG Holdings Co Ltd Japan

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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