The IPOX® Week, December 18, 2017

  • IPOX 100 U.S. (IPXO) closes out week at fresh record. IPOX Europe (IXTE), IPOX Asia-Pacific (IPTA) extend YTD gain.
  • Global IPO Deal-flow Review and Outlook: Japanese IPOs record strong initial gains / more deals lined up.

IPOX 100 U.S. (IPXO) closes out week at fresh record. IPOX Europe (IXTE), IPOX Asia-Pacific (IPTA) extend YTD gain. The diversified, style-box agnostic, all-cap momentum IPOX 100 U.S. (IPXO) closed out Futures and Options expiration and re-balancing week at a fresh record, adding +0.76% to +25.20% YTD, lagging the S&P 500 (SPX) while significantly outperforming U.S. small- and (declining) mid-caps. The index added to gains as strength in its core large-cap positions including payment processor PayPal (PYPL US: 3.76%) or consumer staple Kraft Heinz (KHC US: 1.35%), as well as a surge in select small- caps, including biotech researcher PraHealth (PRAH US: 9.12%), trading firm Virtu (VIRT US: 8.01%) or online retailer Wayfair (W US: 7.18%) outweighed the impact of declines in cement maker Summit Materials (SUM US: -7.09%), specialty chemicals manufacturer Ingevity (IGVT US: -6.51%), media firm Liberty SiriusXM (LSXMA US: -6.02%) or enterprise storage solutions provider Pure Storage (PSTG US: -3.07%). Amid strong gains in the Japan domiciled index members, we note the fresh all-time high in the IPOX Asia-Pacific (IPTA), as well as the renewed relative strength in the IPOX Europe (IXTE), which rose for a fourth consecutive week.

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) 0.79 8.63 27.46
IPOX International (IPXI)* 1.09 9.49 35.10
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.46 8.86 32.59
IPOX 100 U.S. (IPXO)* 0.76 7.06 25.20
IPOX 30 U.S. (IPXT) 0.74 7.99 26.86
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 0.71 5.59 19.96
IPOX Nordic (IPND) -1.06 5.17 14.65
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 1.70 2.85 20.62
IPOX China C. (IPXUCHCHP)* -0.39 12.29 38.71
IPOX China (CNI) 0.71 9.59 31.08

* 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: Japanese IPOs record strong initial gains / more deals lined up: At least 13 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted company adding 9.49% (5.60%) based on the difference between final offer and Friday’s close. Pan-African bank Ecobank Cote d’Ivoire (ECOC BC: 29.98%), Japan’s largest IPO of the year, logistics company SG Holdings (9143 JP: 29.94%), and Japanese real estate firm Katitas (8919 JP: 28.54%) performed best based on final offer. While key IPO Abu Dhabi National Oil (ADNOCDIS UH: 5.60%) rose, deals in Hong Kong, however, disappointed with instant noodle maker Nissin Foods (1475 HK: -2.34%) and private education provider China Education Group (839 HK: -1.86%) falling based on final offer. We also note downsized and withdrawn IPOs, including Aviva investors’ £200 million REIT and Brazil’s largest utility Neoenergia SA’s $1 billion IPO. Most focus this week is on firms outside the U.S., including Burger King’s Brazil operator BK Brasil Operação e Assessoria a Restaurantes (BKBR3 BZ), South African information communication technology services firm Ayo Technology (AYO SJ) and multiple Japanese offerings. IPOs in the U.S. include China-based online consumer finance platform operator LexinFintech (LX US) and Puerto Rico-based insurance underwriter Advantage Insurance (AVI US).

Select IPOs traded (week: 12/11/2017) Country
Petrobras Distribuidora SA Brazil
SG Holdings Co Ltd Japan
Abu Dhabi National Oil Co for Distribution Unit U.A.E.
China Education Group Holdings Ltd Hong Kong
Katitas Co Ltd Japan
Newmark Group Inc U.S.A.
Select IPOs expected (week: 12/18/2017) Country
BK Brasil Operação e Assessoria a Restaurantes Brazil
Advantage Insurance Inc Puerto Rico
AK Medical Holdings Ltd China
Moriroku Holdings Co Ltd Japan
Optorun Co Ltd Japan
Ayo Technology Solutions Ltd South Africa
LexinFintech Holdings Ltd China
Premium Group Co Ltd Japan
Sumo Group PLC Britain
PT Jasa Armada Indonesia Indonesia

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.

This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.

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