The IPOX® Week, January 16, 2017

  • Most IPOX Indexes extend YTD gains. IPOX Global and IPOX Europe surpass markets.
  • Political/Legal overhang pressure select IPOX holdings.
  • Ahead of U.S. deal flow, H.K. IPOs debut strongly.

Most IPOX Indexes extend YTD gains. IPOX Global and IPOX Europe surpass markets. Most IPOX Indexes extended the YTD gains into the second week of trading in the New Year, with the IPOX Global 50 (IPGL50) exceeding the performance of the global benchmarks anew, gaining +0.46% to +3.01% YTD. Markets outside the U.S. were last week’s stand-out, with the IPOX Europe (IXTE) gaining +1.00% to +1.71% YTD, far ahead of the local market benchmarks. Amid 14 consecutive daily gains for U.K. stocks, European companies in focus included Dutch life insurer 06/16 IPO ASR Nederland (ASRNL NA: +10.41%), German online retailer Zalando (ZAL GY: +6.44%) or recent EON Spin-off energy/utility firm Uniper (UN01 GY: +5.73%). Italian fashion maker Moncler (MONC IM: +5.30%) rose towards a fresh post-IPO high, motivated by the IPO filing of Canadian domiciled high-end winter coat maker Bain-backed Canada Goose set to go public in NY and Toronto in February. Continued strength in China-linked exposure traded in the U.S. and Hong Kong supported, led by real estate developer China Vanke (2202 HK: +8.98%), social networkers Momo (MOMO US: +8.15%) and Weibo (WB US: +6.57%), as well as e-commerce platform operator Alibaba Group (BABA US: +2.53%). We note further gains in Chinese banking group Postal Savings Bank of China (1658 HK: +3.29%), last year’s largest global deal. Amongst non U.S.-domiciled exposure, weakest portfolio holdings included U.K.-based online restaurant market place 04/14 IPO Just East (JE/ LN: -11.39%). The U.K.-traded stock sank on concerns about the impact of its recent acquisitions as well as competition fears, spurred by the big gains in Dutch-traded 09/16 IPO EUR 1.3 billion Takeaway.com (TKWY NA: +23.25%) which primarily operates on the European Continent.

IPOX Returns (%) (P) Week 2017 2016
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 0.46 3.01 -2.50
IPOX Global 30 (IPGL30) 0.17 2.97 1.73
IPOX Intern. (IPXI)* 1.40 3.68 -4.63
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.48 3.42 7.24
IPOX 100 U.S. (IPXO)* -0.18 1.90 5.89
IPOX 30 U.S. (IPXT) -0.56 1.97 8.44
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 1.00 1.71 0.18
IPOX Nordic (IPND) 1.00 1.23 -1.59
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 1.45 3.49 -1.96
IPOX China C. (IPXUCHCHP)* 1.36 3.80 -3.73
IPOX China (CNI) 1.56 3.85 -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]).

Political/Legal overhang pressure select IPOX holdings. It was a tale of two worlds for the IPOX U.S. (IPXC, IPXO, IPXT) last week: While the broad, 786 member-strong USD trillion 2.3 IPOX U.S. Composite (IPXC) rose +0.48% to +3.42% YTD, big political/legal overhang in select holdings pressured the narrower IPOX 30 U.S. (IPXT: -0.56%) and IPOX 100 U.S. (IPXO), underlying benchmark for the USD million 634 First Trust U.S. Equity Opportunities ETF (FPX). Respective exposure included drug makers IPOX heavyweights Abbvie (ABBV US: -2.82%) and Shire (SHPG US: -5.49%), as well as car maker Fiat Chrysler (FCAU US: -6.62%) which plunged towards the week-end as the firm faces a criminal emissions probe. Gains in select holdings helped to mitigate the losses, led by specialty chemicals maker Chemours Company (CC US: +15.55%), cloud content sharing platform Box (BOX US: +12.43%) or party products retailer Party City (PRTY US: +10.53%), while IPOX Holding Facebook (FB US: +3.99%) continued to benefit from the big valuation gap as social networker Snap holds pre-IPO talks with potential investors.

Ahead of U.S. deal flow, H.K. IPOs debut strongly. Amid the shortened U.S. trading week, global IPO sentiment continued to build with the respective H.K. listings recording a strong take-up. Having priced towards the bottom of the range, the week’s largest and most significant deal, e.g., the H-share IPO of Jilin Jiutai Rural Commercial Bank (6122 HK) rose a solid +7.46%. Ahead of the opening of the U.S. IPO window with the Nasdaq listing of applications software maker AppDynamics (APPD US), more H.K. IPOs include Beijing-based hospital operator New Century Healthcare (1518 HK). Set to commence trading on Thursday, the firm raised HKD million 883.2 at HKD 7.36, towards the middle of the HKD 6.36 – 8.36 book building range.

Traded IPOs (week of 01/09/2017) Country
 Bar Pacific Group Holdings Ltd.  Hong Kong
 Jilin Jiutai Rural Commercial Bank Corp.  China
 LKS Holding Group Ltd.  Hong Kong
 Miricor Enterprises Holdings Ltd.  Hong Kong
 Morris Holdings Ltd.  China
 WWPKG Holdings Co. Ltd  Hong Kong
 Yuk Wing Group Holdings Ltd.  Hong Kong
Upcoming IPOs (week of 01/16/2017) Country
New Century Healthcare Holding Co. Ltd. Hong Kong
Zhi Sheng 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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