IPOX Indexes start year with strong gains. IPOX Global and IPOX U.S. surpass rising markets. The IPOX Indexes started the year with big gains with the IPOX Global (IPGL50, IPGL30, IPXI) exceeding the performance of the global market, benchmarks benefiting from asset allocation shifts into global equities, lower U.S. yields and big gains in China-linked exposure. In the U.S., the diversified IPOX U.S. Indexes (IPXC, IPXO, IPXT) surged, far outpacing weak U.S. small-caps and the S&P 500 (SPX), while lagging the Nasdadq-100 (NDX). Select IPOX U.S. Indexes closed the week at fresh all-time highs, led by the IPOX 30 U.S. (IPXT). Individual stocks in focus included U.S. car maker IPOX heavyweight Fiat Chrysler (FCAU US: +14.25%), which extended its gain since the beginning of Q4/16 to a massive +69.71% on a big spike on volume, perceived to be takeover rumor-driven. Jack Dorsey-led firms payment processor Square (SQ US: +10.05%) and beleaguered social networker Twitter (TWTR US: +5.34%) were other stand-outs on the week. With newcomer social networker Q1/2017 IPO Snap set to price at around three times its valuation, investors also snapped up IPOX holding Facebook (FB US: +7.27%), which bounced after a dismal few weeks of trading. Notable non-US domiciled exposure propelling the IPOX Global (IPGL50, IPGL30, IPXI) included the slew of China-linked firms trading on the U.S. exchanges, namely hard-hit courier service ZTO Express (ZTO US: +10.52%), social networkers Weibo (WB US: +10.22%) and Momo (MOMO US: +10.83%), as well as Chinese e-commerce behemoth Alibaba (BABA US: +6.92%). One of last year’s big winners in Hong Kong, Chinese educational services provider Virscend Education (1565 HK: -7.61%), fell last week, while U.S. traded party goods retailer Party City (PRTY US: -6.34%) suffered in tandem with most other U.S. retailers as it announced the acquisition of franchised stores. Other notable negative performers last week included cable and satellite services provider Cable One (CABO US: -8.32%), as well as telecoms carrier Zayo Group (Zayo US: -6.42%).
|IPOX Returns (%) (P)||Week||2017||2016|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global 50 (IPGL50)||2.54||2.54||-2.50|
|IPOX Global 30 (IPGL30)||2.79||2.79||1.73|
|IPOX Intern. (IPXI)*||2.25||2.25||-4.63|
|Exposure: United States|
|IPOX Composite U.S. (IPXC)*||2.92||2.92||7.24|
|IPOX 100 U.S. (IPXO)*||2.09||2.09||5.89|
|IPOX 30 U.S. (IPXT)||2.54||2.54||8.44|
|Exposure: Europe/Nordic Region|
|IPOX Europe (IXTE)||0.86||0.86||0.18|
|IPOX Nordic (IPND)||0.23||0.23||-1.59|
|Exposure: Asia-Pacific/China Region|
|IPOX Asia-Pacific (IPTA)||2.22||2.22||-1.96|
|IPOX China C. (IPXUCHCHP)*||2.40||2.40||-3.73|
|IPOX China (CNI)||3.19||3.19||-10.21|
* 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 [IPOH7]).
IPOX-linked investment products focus: AUMs rise. Select IPOX-linked investment products rose strongly last week. Amid a surge in creation activity, the semi-passive USD million 635, 5-star, 10-year old First Trust U.S. Equity Opportunities ETF (ticker: FPX) rose +2.00% last week, while the First Trust International IPO ETF (FPXI) closed the week +2.34% higher. Last year’s stand-out, the Catalyst IPOX Allocation Fund (ticker: OIPAX) closed the week at an all-time high, adding +1.12% on the week. The mutual fund available to U.S. investors incorporates an active overlay strategy provided by IPOX to a core position in the diversified IPOX 100 U.S. Index.
New IPO window opens with slew of H.K. deals. No significant deal flow commenced trading on an accessible exchange (non China-A shares) last week. H.K. deals are set to re-open the global IPO window this week: Most notable is the IPO of Jilin Jiutai Rural Commercial Bank (6122 HK) set to debut in H.K. on 01/12/17. Amid the poor performance of 09/16 IPO Postal Savings Bank (1658 HK: -10.50% since IPO) – last year’s largest global deal – the firm priced its IPO at HKD 4.56, near to bottom of the HKD 4.54-4.76 range, raising HKD billion 3.01 in the process. Other micro-caps H.K. deals include Bar Pacific Group (8432 HK: operator of pubs throughout H.K.), LKS Holdings (8415 HK: provider of interior design services in H.K.), ISDN Holdings (1656 HK: Singapore-domiciled engineering services provider seeking to dual list in H.K.), Miricor (8358 HK: surgical skin care and beauty services provider based in H.K.), Morris Holdings (1575 HK: Mainland China-based furniture maker) and Yuk Wing Group (1536 HK: Mainland China-based maker of Industrial machinery).
|Traded IPOs (week of 01/02/2017)||Country|
|no significant accessible deal flow last week|
|Upcoming IPOs (week of 01/09/2017)||Country|
|Bar Pacific Group Holdings Ltd.||Hong Kong|
|LKS Holding Group Ltd.||Hong Kong|
|ISDN Holdings Ltd.||Hong Kong|
|Jilin Jiutai Rural Commercial Bank Co. Ltd.||Hong Kong|
|Miricor Enterprises Holdings Ltd.||Hong Kong|
|Morris Holdings Ltd.||Hong Kong|
|Yuk Wing Group Holdings Ltd.||Hong Kong|
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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