The IPOX® Week, December 25, 2017

  • Most IPOX Indexes surge ahead of year-end / Big jump in China-linked exposure propels IPOX International (IPXI) to all-time closing high. ETFs in focus: FPXI, FPX.
  • Global IPO Deal-flow Review and Outlook: Deals close with strong initial gains / IPO market shut for holidays.

Most IPOX Indexes surge into year-end / Big jump in China-linked exposure propels IPOX International (IPXI) to close at all-time high. ETFs in focus: FPXI, FPX. Big gains in China-linked exposure and special situations propelled select IPOX Indexes last week, with the IPOX International (IPXI) – underlying for the First Trust International IPO ETF (FPXI) – adding 1.56% to 37.24% YTD, a fresh all-time high and a massive 1730 bps. ahead of the international market YTD. Relative strength extended to the IPOX 100 U.S. (IPXO), with the benchmark for U.S. IPOs, Spin-offs and IPO M&A activity adding 0.98% to 26.42% YTD, 70 bps. ahead of the S&P 500 (SPX) – yardstick for U.S. stocks – on the week. Big gains in specialty stocks contributed to the strong showing, including high-end anorak jacket maker Canada Goose (GOOS US: 12.33%), H.K.- traded packed foods producer Dali Foods (3799 HK: 10.99%), US brick-and-mortar retailers Burlington Stores (BURL US: 7.67%) and Ollies Bargain Outlet (OLLI US: 6.40) or social networkers/perceived takeover plays Twitter (TWTR US: 10.03%) or Tinder-owner Match Group (MTCH US: 8.43%). We note the big upside in select biotech’s tracked by IPOX, including Avexis (AVXS US: 10.34%) and Genscript (1548 HK: 53.02%). Payment processor Square (SQ US: -5.10%) declined on weakness on digital currencies.

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) 0.96 8.63 28.70
IPOX International (IPXI)* 1.49 9.49 37.15
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 1.45 8.86 34.50
IPOX 100 U.S. (IPXO)* 0.98 7.06 26.42
IPOX 30 U.S. (IPXT) 0.45 7.99 27.43
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.31 5.59 19.57
IPOX Nordic (IPND) 2.32 5.17 17.32
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 1.45 2.85 22.36
IPOX China C. (IPXUCHCHP)* 2.51 12.29 42.17
IPOX China (CNI) 4.19 9.59 36.55

* 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 9 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted company adding 31.45% (13.50%) based on the difference between final offer and Friday’s close. Japanese vacuum coating machines manufacturer Optorun (6235 JP: 97.19%) and H.K. traded IPO, Chinese orthopedic implants manufacturer AK Medical (1789 HK: 80.00%), recorded as the best performing based on final offer. The two Chinese IPOs in the U.S. last week including pet products producer Dogness International (DOGZ US: 17.00%) and online lender LexinFintech (LX US: 57.78%) also recorded solid performances. While Brazil ‘Burger King’ operator BK Brasil Operação e Assessoria a Restaurantes (BKBR3 BZ: -4.00%) fell below offer. We also note more downsized and postponed deals last week, including Puerto Rico insurance company Advantage Insurance’s $100 million. No significant deals are lined up amid Christmas and holiday season.

Select IPOs traded (week: 12/18/2017) Country
AK Medical Holdings China
Ayo Technology Solution Ltd South Africa
BK Brasil Operação e Assessoria a Restaurantes Brazil
Dogness International Corp China
LexinFintech Holdings Ltd China
Moriroku Holdings Co Ltd Japan
Optorun Co Ltd Japan
Premium Group Co Ltd Japan
Sumo Group PLC Britain
Select IPOs expected (week: 12/25/2017) Country
Do Day Dream PCL Thailand

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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