The IPOX® Week, December 4, 2017

  • IPOX 100 U.S. Index (IPXO) flatlined as profit taking hits global technology, risk rises. Weak China pressures IPOX Global (IPGL50), IPOX Europe (IXTE) gains.
  • Global Deal-flow Review and Outlook: Ahead of expiration week, significant deal flow lined up.

IPOX 100 U.S. Index (IPXO) flatlined as profit taking hits global technology, risk rises. Weak China pressures IPOX Global (IPGL50), IPOX Europe (IXTE) gains. Amid rising risk (VIX: 18.20%) and profit taking in global high beta exposure mostly linked to Technology, the style-box agnostic, large-cap centric IPOX 100 U.S. (IPXO) closed last week unchanged, lagging the S&P 500 (SPX), while outperforming the NASDAQ. With small-caps trading higher on the week, 59/100 IPOX 100 U.S. (IPXO) portfolio holdings finished the week in positive territory, with the average (median) equally-weighted stock adding 0.30% (0.86%), ahead of the applied market-cap weighted IPOX 100 U.S. (IPXO). Stocks with most upside focus included arts and crafts retailer Michaels Cos (MIK US: 18.28%), high frequency trading firm Virtu Financial (VIRT US: 16.64%) or real estate website operator Redfin Corp (RDFN US: 16.04%), while the Jack Dorsey-led portfolio holdings such as social networker Twitter (TWTR US: -7.63%) and mobile payment processor Square Inc (SQ US: -21.90%) succumbed to profit taking after downgrades to rank amongst the worst performing IPOX 100 U.S. (IPXO) members. With the announced IPO/Spin-off of EUR 40 billion Siemens Healthcare set to mark Germany’s largest IPO since the Deutsche Telecom (DTE GY: 1.15%) privatization in 1996, big gains in low-cost air line Wizz Air (WIZZ LN: 6.27%) and Denmark’s utility Orsted (ORSTED DC: 6.14%) helped the IPOX Europe (IXTE) to regain some relative momentum to trade higher, despite more losses for beleaguered French cable & telecom services provider IPOX heavyweight Altice (ATC NA: -10.90%).

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) -1.49 8.63 26.93
IPOX International (IPXI)* -1.74 9.49 33.87
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* -1.51 8.86 32.05
IPOX 100 U.S. (IPXO)* -0.03 7.06 24.40
IPOX 30 U.S. (IPXT) -0.33 7.99 26.47
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 0.27 5.59 17.38
IPOX Nordic (IPND) -0.28 5.17 15.57
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) -0.61 2.85 18.17
IPOX China C. (IPXUCHCHP)* -4.59 12.29 39.60
IPOX China (CNI) -4.10 9.59 31.98

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

Global Deal-flow Review and Outlook: Ahead of expiration week, significant deal flow lined up: At least 4 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted company dropping by -2.37% (0.00%) based on the difference between final offer and Friday’s close. Initial sentiment was mixed as losses in South Korean plastic container manufacturer Samyang Packaging (272550 KS: -11.54%) were mitigated by a solid debut of construction firm Wijaya Karya Bangunan Gedung (WGE IJ: 2.07%), Indonesia’s third largest IPO YTD. Significant deal flow is lined up across the global regions this week, including utility Gulf Energy Development (GULF TB), the biggest IPO in Thailand YTD and National Life & General Insurance (NLIF OM), Oman’s largest insurance company. Deals in the U.S. include mostly small-caps, such as CS-led consumer financial CURO Group (CURO US) or life science equipment maker JP Morgan-led Quanterix (QTRX US).

Select IPOs traded (week: 11/27/2017) Country
Cromwell European REIT Singapore
Regalwood Global Energy Ltd U.S.A.
Samyang Packaging Corp South Korea
Wijaya Karya Bangunan Gedung PT Indonesia
Select IPOs expected (week: 12/04/2017) Country
New Energy Solar Ltd Australia
Spheria Emerging Co Ltd Australia
CURO Group Holdings Corp U.S.A.
Gamenet Group SpA Italy
Gulf Energy Development PCL Thailand
National Life & General Insurance Co SAOC Oman
Sabre Insurance Group PLC Britain
Odonate Therapeutics Inc U.S.A.
Quanterix Corp U.S.A.
Thonburi Healthcare Group PCL Thailand
Aviva Investors Secure Income REIT Britain
Denali Therapeutics Inc U.S.A.
Luther Burbank Corp U.S.A.
Shandong International Trust Co Ltd China
TRI-Pillar Infrastructure Fund Ltd Britain

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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