The IPOX® Week, July 16, 2018

  • IPOX Indexes record strong gains across the board.
  • IPOX-linked AUM hit all-time high.
  • IPO Deal-flow Review & Outlook: Xiaomi (1810 HK) surges after lackluster debut/U.S. biotech set to dominate deal calendar.

IPOX Indexes record strong gains across the board. The IPOX Indexes rose sharply across the board ahead of U.S. expiration week, as strength in U.S. tech and smooth U.S. (economic) momentum as well as firmer China helped to mitigate the negative impact of renewed trade tensions amid temporary spikes in volatility. On the back of big gains in some of its heavyweights, most upside focus within the IPOX Indexes Universe was on the diversified IPOX Europe (IXTE) which extended its YTD lead vs. the European Market to a massive +827 bps. Relative strength extended to the IPOX China (CNI) or the IPOX Nordic (IPND). In the U.S., amid big gyrations in U.S. equity indexes spreads, the FAANG-free, diversified IPOX 100 U.S. (IPXO) finished the week with solid gains, significantly outpacing U.S. small-caps, while also lagging the S&P 500 (SPX) – benchmark for U.S. stocks. Ahead of key earnings, upside focus in individual portfolio holdings remained on global payment processors, including Netherlands-based Adyen (ADYEN NA: +17.24%), OH-based Worldpay (WP US: +3.74%) or EBAY (EBAY US: +0.59%) Spin-off IPOX heavyweight PayPal (PYPL US: +2.39%). Select China-domiciled small-caps bounced strongly from recent weakness, including packaged food maker Yihai International (1579 HK: +34.73%), streaming video services provider iQiYI (IQ US: +13.47%) or biotech Genscript (1548 HK: +13.42%). For a second week in a row, we note big declines in select IPOX Europe (IXTE) holdings, including specialty pharma producer Indivior (INDV LN: -21.91%) which drastically altered guidance for the rest of the year.

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 +0.67% to +8.83% YTD, while its international version (FPXI) rose to +0.90% YTD. Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) extended the YTD gain to +11.43%. Across IPOX-linked Funds, AUM hit an all-time high.

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) 1.93 28.59 3.47
IPOX International (IPXI)* 1.74 37.80 0.04
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 0.59 33.64 9.40
IPOX 100 U.S. (IPXO)* 0.59 26.04 8.52
IPOX 30 U.S. (IPXT) 0.76 26.63 5.06
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 2.35 19.27 5.49
IPOX Nordic (IPND) 1.98 17.91 2.39
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.60 23.30 0.00
IPOX China (CNI) 3.29 37.67 6.52

* 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: Xiaomi (1810 HK) surges after lackluster debut/U.S. biotechs set to dominate deal calendar: At least 19 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +17.45% (+7.35%) based on the difference between the final offering price and Friday’s close. Most notable is Chinese smartphone maker Xiaomi’s (1810 HK: +26.18%) big rally in the immediate aftermarket, despite its first day flop. Australian’s biggest IPO in almost 4 years – oil refining and marketing company Viva Energy (VEA AU: -4.00%) -disappointed, while Indonesian real estate developer Pollux Properti Indonesia (POLL IJ: 133.33%) ranked as the best performer last week. After a quiet week, the U.S. IPO market is set to pick up steam with at least 10 deals – 7 of which are VC-backed biotech or biopharma firms – set to go public. Most focus in deals outside the U.S. is on the H.K. IPO of Chinese real estate services provider E-House China Enterprise (2048 HK), with e-commerce conglomerate Alibaba (BABA US) and real estate developer China Vanke (2202 HK) being its cornerstone investors.

Select IPOs traded (week: 07/09/2018) Country
Bank of Jiujiang Co Ltd China
Hipgnosis Songs Fund Ltd Guernsey
Inke Ltd China
MTG Co Ltd Japan
Pollux Properti Indonesia Tbk PT Indonesia
Qeeka Home Cayman Inc China
Redsun Properties Group Ltd China
Tianli Education International China
Viva Energy Group Ltd Australia
Select IPOs expected (week: 07/16/2018) Country
AFG Holdings Inc United States
Allakos Inc United States
Constellation Pharmaceuticals United States
Crinetics Pharmaceuticals Inc United States
E-House China Enterprise Holding China
Qilu Expressway Co Ltd China
Replimune Group Inc United States
Rubius Therapeutics Inc United States
TheWorks.co.uk PLC Britain
Tilray Inc Canada

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 billion 1.2, 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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