The IPOX® Week, December 19, 2016
December 19, 2016- IPOX Indexes finish FED week mixed. China-linked exposure weighs, IPOX Europe (IXTE) rallies. IPOX U.S. 30 (IPXT) closes week at all-time high.
- Individual stocks in focus.
- IPO year winds down with mixed showing for respective deals. Little deal flow seen.
IPOX Indexes finish FED week mixed. China-linked exposure weighs, IPOX Europe (IXTE) rallies. IPOX U.S. 30 (IPXT) closes week at all-time high. The IPOX Indexes finished expiration and FED week mixed: While some key IPOX heavyweights stabilized and select holdings surged on potential corporate action activity, select China-linked exposure slumped on year-end selling and U.S. Dollar strength. Most upside focus was on the IPOX Indexes covering Developed Markets, with IPOX Europe (IXTE) adding +1.84% to -0.52% YTD, while the IPOX 30 U.S. (IPXT) – sub-set of the broad-based IPOX 100 U.S. (IPXO) – closed the week at the highest level on record, outperforming all U.S. market benchmarks. IPOX-linked Investment products finished the week well-supported vs. the market benchmarks with the 5-star USD million 618 IPOX 100 U.S. Index –linked First Trust U.S. Equity Opportunities ETF (ticker: FPX) shedding -0.20% to +7.16% YTD.
| IPOX Returns (%) (P) | Week | Q3 16 | YTD 16 |
| Exposure: Global/International (xUS) (USD) | |||
| IPOX Global 50 (IPGL50) | -0.83 | 8.91 | -1.67 |
| IPOX Global 30 (IPGL30) | -0.41 | 9.85 | 2.61 |
| IPOX Intern. (IPXI)* | -2.01 | 11.01 | -4.36 |
| Exposure: United States | |||
| IPOX Composite U.S. (IPXC)* | -1.61 | 11.33 | 7.70 |
| IPOX 100 U.S. (IPXO)* | -0.21 | 7.16 | 6.43 |
| IPOX 30 U.S. (IPXT) | 0.32 | 8.41 | 9.15 |
| Exposure: Europe/Nordic Region | |||
| IPOX Europe (IXTE) | 1.84 | 12.02 | -0.52 |
| IPOX Nordic (IPND) | -0.78 | 7.45 | -5.41 |
| Exposure: Asia-Pacific/China Region | |||
| IPOX Asia-Pacific (IPTA) | -2.33 | 5.28 | -1.20 |
| IPOX China C. (IPXUCHCHP)* | -3.40 | 16.94 | -3.18 |
| IPOX China (CNI) | -3.99 | 11.59 | -9.57 |
* Basis for Exchange-Traded Products (e.g. FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [IPOZ6]).
Individual stocks in focus. A solid week for U.S. biotechs supported, as core holdings including heavyweights IL-based drug makers Abbvie (ABBV US: +1.10%) and hard-hit Shire (SHPG US: +3.05%) rose. We also note a good week in consumer staple Kraft Heinz (KHC US: +3.20%) which gained on speculation of a pending deal with Mondolez (MDLZ US: +5.77%). In the IPOX U.S., we also note big gains for specialty chemicals maker Spin-off Ingevity (NGVT US: +7.25%, US Foods (USFD US: +5.66%), while retailers slumped, including Duluth (DLTH US: -12.40%), Michaels Cos (MIK US: -7.18%) and Party City (PRTY US: -6.51%). In Europe, big gains in investment manager Amundi (AMUN FP: +9.16%) and cable services operator Altice (ATC NA: +6.21%) helped to offset weakness in IPOX heavyweight Dutch Financial ABN Amro (ABN NA: -2.40%). Amid big weakness in China-linked stocks, we note last week’s big gains in China-based educational services provider Virscend Education (1565 HK: +27.51%).
| Traded IPOs (week of 12/12/2016) | Country |
| Agricultural Development Bank | Ghana |
| Aino Health | Sweden |
| Anacle Systems | Singapore |
| CareerIndex | Japan |
| Matching Service Japan | Japan |
| Meitu | China |
| Mirai | Japan |
| Nanfang Communication | China |
| RM Secured Direct Lendin | United Kingdom |
| Shakey’s Pizza Asia Ventures | Philippines |
| TiGenix | Belgium |
| Trivago | Germany |
| WildHorse Resource Development | United State |
| Upcoming IPOs (week of 12/19/2016) | Country |
| AAC Microtec | Sweden |
| Da Sen Holdings | Hong Kong |
| Nextstage | France |
IPO year winds down with mixed showing for respective deals. Little deal flow seen. At least 13 notable IPOs commenced trading last week, with the average (median) equally-weighted deal closing the week +3.39% (+0.59%) above offer. Global focus was on Chinese app maker Meitu (1357 HK), which raised USD million 629 at the low end of the range and finished the week just +0.59% above offer, reflecting the muted sentiment for the sector after Line’s (LINE US:-4.96%) sharp performance drop. Having priced the deal below range with recent corporate results by Tripadvisor (TRIP US: -3.78%) weighing, Nasdaq-listed online travel website operator Trivago (TRVG US) recorded a solid first day of trading, while NYSE-listed WildHorse Resource Development (WRD US) finished the week with slight losses. The IPO year winds down with a select list of small-cap IPOs abroad (AAC Microtec, Da Sen Holdings and Nextstage).
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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