After the big run-up, IPOX Indexes suffer broad based profit taking as yields rise; Market catches up with weak U.S. small- and mid-caps. The IPOX Indexes fell sharply last week on profit taking after the big run-up, as strong economic numbers triggered a further rise in yields and U.S. large-caps finally caught up with the relative weakness in U.S. small- and mid-caps. Declines within the IPOX Indexes Universe were broad-based with the IPOX Global 50 (IPGL50) shedding -4.02% to +6.34% YTD, lagging the global market by -56 bps. on the week. Amid the broad weakness across sectors, the IPOX Regional Portfolios recorded notable positive moves amongst individual portfolio holdings, including Finish telecom services provider DNA (DNA FH: +13.28%), 12/2017 IPO Japan-traded courier service SG Holdings (9143 JP: +9.09%), US social networker Twitter (TWTR US: +6.80%) or Italian sports car maker Ferrari (RACE US: +5.99%).
IPOX® 100 U.S. Investing with the 5-star “FPX” ETF since 2006
IPOX-linked ETFs mirrored the weakness in the underlying Indexes. For example, the NYSE-listed USD billion 1.05 First Trust U.S. Equity Opportunities ETF (FPX) – which tracks the IPOX® 100 U.S. (IPXO) – sank to +4.24% YTD, while the NASDAQ-listed First Trust International IPO ETF (FPXI) – which tracks the IPOX® International (IPXI) – declined to +8.19% YTD.
|IPOX Price Returns (%)||Last Week||2017||2018 YTD|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||-4.02||28.59||6.34|
|IPOX International (IPXI)*||-2.91||37.80||8.43|
|Exposure: United States (USD)|
|IPOX Composite U.S. (IPXC)*||-5.49||33.64||4.78|
|IPOX 100 U.S. (IPXO)*||-4.63||26.04||4.26|
|IPOX 30 U.S. (IPXT)||-4.99||26.63||4.76|
|Exposure: Europe/Nordic Region (EUR)|
|IPOX Europe (IXTE)||-1.49||19.27||2.62|
|IPOX Nordic (IPND)||-0.90||17.91||0.55|
|Exposure: Asia-Pacific/China Region (USD)|
|IPOX Asia-Pacific (IPTA)||-1.32||23.30||6.72|
|IPOX China C. (IPXUCHCHP)*||-5.14||42.57||7.84|
|IPOX China (CNI)||-5.45||37.67||10.51|
* 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: IPOH8].
IPO Deal-flow Review & Outlook: Mixed initial showing of deals, positive momentum set to extend into first full week of February trading. At least 7 notable (non-China A shares and non-local India) firms commenced trading last week with the average (median) equally-weighted firm adding +4.19% (+5.05%) based on the difference between the final offering price and Friday’s close. Upside focus was on Credit Suisse-led oil field services provider FTS International (FTSI US: +14.50%) and downsized, and below range offered Argentina Power generation company Central Puerto (CEPU US +7.94%), while Private Equity-backed travel concessions operators UK-domiciled Hudson (HUD US: -5.26%) and Luxembourg-based Corp America Airports (CAAP US: -2.35%) finished the first week of trading below final offer. The global IPO market is set to continue its positive momentum into the first full week of trading in February: Deals in focus this week include Spanish real estate developer Metrovacesa (MVC SM), one of the world’s largest quick service restaurants operators – Turkish leading electricity company TFI TAB (TFIG US), German energy giant E.ON affiliated Enerjisa Enerji (ENJSA TI), and Chinese smartphone maker Xiaomi’s strategic partner, smart wearable tech-device company Huami (HMI US).
|Select IPOs traded (week: 01/29/2018)||Country|
|Central Puerto S.A.||Argentina|
|Corporación América Airports S.A.||Luxembourg|
|FTS International Inc||U.S.A.|
|Sol-Gel Technologies Ltd||Israel|
|Salmones Camanchaca S.A.||Chile|
|VICI Properties Inc||U.S.A.|
|Select IPOs expected (week: 02/05/2018)||Country|
|A-Living Service Co Ltd.||China|
|Blau Farmacêutica SA||Brazil|
|CRE Logistics REIT Inc.||Japan|
|Dermapharm Holding SE||Germany|
|Enerjisa Enerji A.S.||Turkey|
|IPSCO Tubular Inc.||U.S.A.|
|Pinnacle Renewable Holdings Inc.||Canada|
|Power Generation Corp 3 Co Ltd||Vietnam|
|Quintana Energy Services Inc.||U.S.A.|
|TFI TAB Gıda Yatırımlarındx A.Ş.||Turkey|
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.