The IPOX® Week, January 8, 2018

  • IPOX Indexes record massive gains during first week of trading in New Year; Surge in China-linked exposure propels IPOX International (IPXI) by 4.74%.
  • Amid gains in exposure linked to special situations, AUM in IPOX 100 U.S.-linked FPX ETF surpass USD billion 1.
  • IPO Deal-flow Review and Outlook: No significant deals commence trading; Deal calendar light.

IPOX Indexes record massive gains during first week of trading in New Year; Surge in China-linked exposure propels IPOX International (IPXI) by 4.11% on the week. The style-agnostic IPOX Indexes started the New Year with continued strong gains, with the IPOX Global (IPGL50) – benchmark for the performance of the largest and best performing global IPOs, Spin-offs and IPO M&As – adding 4.36% on the week, far outpacing global equities. Most upside was recorded by the IPOX China (CNI: 8.48%), benefitting from huge moves in biotech’s Genscript (1548 HK: 30.13%) and Wuxi Pharma (2269 HK: 15.33%), bluechip real estate developer China Vanke (2202 HK: 17.63%) or social networker Weibo (WB US: 16.82%), which were also the top gainers in the IPOX International (IPXI: 4.74%) – underlying for the NASDAQ-traded First Trust International IPO ETF (FPXI), one of the top performing international sector ETFs in 2017. Only few IPOX Holdings closed lower on the week, including H.K.-traded food manufacturer Dali Foods (3799 HK: – 2.11%), following relative weakness in global consumer staples. The IPOX Indexes focusing on Europe (IXTE, IPND) tended similarly, with strength in tire maker Pirelli (PIRC IM: 6.76) or luxury car producer Ferrari (RACE IM: 6.75%) far outweighing the impact of weakness in German food ordering platform operator Delivery Hero (DHER GR: -3.03%), for example.

Amid gains in exposure linked to special situations, AUM in IPOX 100 U.S. (IPXO)-linked FPX ETF surpass USD billion 1. In the U.S., outsized gains in stocks linked to special situations drove the IPOX U.S. Indexes (IPXC, IPXO, IPXT) further into uncharted territory, with the IPOX-linked First Trust U.S. Equity Opportunities ETF (FPX) rising to 2.84% YTD, outpacing most U.S. equities. AUM of the NYSE-traded ETF surpassed the USD billion 1 mark for the first time since fund inception in April 2006. While special situation plays car producer Fiat Chrysler (FCAU US: 22.03%), recent Spin-off Delphi (DLPH US: 7.64%) or payment processors Square (SQ US: 18.66%) and PayPal (PYPL US: 6.90%) surged, select small-caps recorded big losses, including real estate website Redfin (RFIN US: -9.96%), medical devices maker Penumbra (PEN US: -9.51%) or biotech Avexis (AVXS US: -7.76%). In all, 71/100 IPOX 100 U.S. (IPXO) portfolio holdings rose on the week, with the average (median) equally-weighted stock adding 1.78% (1.35%), significantly lagging the applied market cap-weighted index.

IPOX 100 U.S. Investing with the 5-star FPX ETF since 2006:

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 4.36 28.59 4.36
IPOX International (IPXI)* 4.74 37.80 4.74
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 4.11 33.64 4.11
IPOX 100 U.S. (IPXO)* 2.95 26.04 2.95
IPOX 30 U.S. (IPXT) 3.66 26.63 3.66
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 2.28 19.27 2.28
IPOX Nordic (IPND) 2.02 17.91 2.02
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 2.24 23.30 2.24
IPOX China C. (IPXUCHCHP)* 6.50 42.57 6.50
IPOX China (CNI) 8.48 37.67 8.48

* 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 and Outlook: No significant deals commence trading; Deal calendar light. Only one notable (non-China A shares and non-local India) firm commenced trading last week with U.S. Massachusetts based biotech company Cue BioPharma (CUE US: 100%) soaring based on the difference between the final offering price and the week’s close. Focus this week is on two U.S. domiciled deals including E&P service company Goldman Sachs/Morgan Stanley-led Liberty Oilfield Services (LBRT US) and Citi/UBS-led industrial REIT Industrial Logistic Properties Trust (ILPT US).

Select IPOs traded (week: 01/01/2018) Country
Cue BioPharma Inc U.S.A.
Select IPOs expected (week: 01/08/2018) Country
 Liberty Oilfield Services Inc  U.S.A.
Industrial Logistics Properties Trust U.S.A.

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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