The IPOX® Week, July 09, 2018

  • IPOX U.S. and IPOX Europe lead IPOX Indexes to strong start into the new quarter; concerns over trade pressure IPOX China anew.
  • IPO Deal-flow Review & Outlook: Slow U.S. deal flow seen/Hong Kong takes the lead/All eyes on Xiaomi.

IPOX U.S. and IPOX Europe lead IPOX Indexes to strong start into the new quarter; concerns over trade pressure IPOX China anew. Driven by strong momentum in select specialty holdings, big strength in global payment processors and good economic numbers into the week-end, most IPOX Indexes started the new quarter with strong gains. The FAANG-free, style-agnostic IPOX 100 U.S. (IPXO) ranked on top, adding +2.87% to +7.89% YTD, beating the S&P 500 (SPX) – benchmark for U.S. stocks – by a large +134 bps. during the shortened U.S. trading week. Here, while payment processors IPOX heavyweights PayPal (PYPL US: +3.21%) or Square (SQ US: +7.79%) rose strongly, relative gains were also driven by a big jump in select small-cap specialty exposure with 90/100 portfolio holdings closing the week in positive territory, with e-commerce firm StichFix (SFIX US: +18.11%), car vending machine operator Carvana (CVNA US: +13.39%), online health services portal operator Teledoc (TDOC US: +9.13%) or biotech Fibrogen (FGEN US: +7.43%) all hitting all-time highs. Strong gains also extended to the IPOX Europe (IXTE) which extended the relative YTD gains vs. the European market to a +638 bps. More positive sentiment there, however, was mitigated by the plunge in London-listed infrastructure software maker Sophos (SOPH LN: -28.08%), underlying the risk in this “red-hot” sector. Select high beta China-linked small-caps suffered most from the big jump in China-linked risk over the past weeks on trade last week, including biotech’s Genscript (1548 HK: -12.44%), Wuxi Biologics Cayman (2269 HK: -11.10%) or packaged food maker Yihai International (1579 HK: -10.70%).

IPOX-linked Investment Products Performance Update: Last week, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) added +2.87% to 8.12% YTD, while its international version (FPXI) fell to -1.38% YTD. Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) rose to +10.71% YTD.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 1.60 28.59 1.50
IPOX International (IPXI)* 0.15 37.80 -1.68
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 2.71 33.64 8.76
IPOX 100 U.S. (IPXO)* 2.87 26.04 7.89
IPOX 30 U.S. (IPXT) 2.74 26.63 4.27
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 1.52 19.27 3.07
IPOX Nordic (IPND) 0.83 17.91 0.41
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.28 23.30 -0.60
IPOX China (CNI) -3.03 37.67 3.12

* 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: IPOU8].

IPO Deal-flow Review & Outlook: Slow U.S. deal flow seen/Hong Kong takes the lead/All eyes on Xiaomi (1810 HK): 5 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +7.15% (+1.55%) based on the difference between the final offering price and Friday’s close. Amid the shortened U.S. trading week, focus was on deal flow outside the U.S. with Sydney-traded VC-backed gas flow monitoring company Pivotal System (PVS AU: 44.09%) ranking as the best performing deal on the week based on final offer, while Hong Kong-based architectural and interior design company Steve Leung Design Group (2262 HK: +17.05%) defied the weak local market. Spotlight of this week is on a slew of listings across sectors in the Hong Kong Market, including the landmark IPO of Chinese smartphone marker Xiaomi (1810 HK). Priced at the bottom of bookbuilding range, the company raised USD billion 4.8 billion, ranking as the second largest global IPO of the year, and the largest tech IPO in Hong Kong market on record. We also note that the company postponed its plan for mainland China Depository Receipt (CDR) offering in Shanghai. Ahead of its official trading start on Monday, the shares fell in gray market trading.

Select IPOs traded (week: 07/02/2018) Country
Pivotal Systems Corp United States
Propnex Ltd Singapore
Okeanis Eco Tankers Corp Greece
Steve Leung Design Group Ltd Hong Kong
China Isotope & Radiation Corp China
Select IPOs expected (week: 07/09/2018) Country
 Xiaomi Corp  China
 Bank of Jiujiang Co Ltd  China
 MTG Co Ltd  Japan
 Redsun Properties Group Ltd  China
 FingerTango Inc  China
 Inke Ltd  China
Intron Technology Holdings Ltd Hong Kong
Qeeka Home Cayman Inc China
Tianli Education International China
51 Credit Card Inc China
Zhejiang Cangnan Instrument Group China

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.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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