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The IPOX® Week, July 17, 2017

  • Select IPOX Indexes outpace rising markets, extend move into uncharted territory.
  • IPOX-linked ETFs close at fresh record. AUM rise.
  • Global deal-flow review and outlook: Most IPOs rise based on final offer, record number deals lined up.

Select IPOX Indexes outpace rising markets, extend move into uncharted territory. Ahead of earnings, the IPOX Indexes continued to benefit from relatively muted global low-volatile trading conditions underpinned by momentum and solid economic data. On the global level, the IPOX Global (IPGL50) added +2.72% to +17.71% YTD last week, outpacing global equities for a second week in a row. Performance within the IPOX Regional Indexes universe was similarly strong: Despite sagging U.S. social networker Snap (SNAP US: -11.12%), a good week in hard-hit consumer staple IPOX heavyweight Kraft Heinz (KHC US: +3.14%), Jack Dorsey-led payment processor Square (SQ US: +11.62) and social networker Twitter (TWTR US: +8.99%), or continued strong momentum in generational growth exposure payment processor PayPal (PYPL US: +5.19%) helped the IPOX 100 U.S. (IPXO) Index to sail past most U.S. equities, adding +1.80% to +11.79% YTD. In the IPOX Indexes universe focusing on non-U.S. domestic stocks, solid Chinese and European economic data supported renewed upside in the slew of China-domiciled, U.S.-traded firms, e.g., including e-commerce behemoth Alibaba (BABA US: +6.60%), logistics firm JD.com (JD US: +7.11%) or social networker Weibo (WB US: +7.04%), while luxury car maker Ferrari (RACE US: +8.02%) raced to yet another all-time high.

IPOX-linked ETFs close at fresh record. AUM rise. Last week, the U.S.-focused USD million 850 First Trust U.S. Equity Opportunities ETF (FPX) added +1.89% to +12.11%YTD, while the internationally-focused First Trust International IPO ETF (FPXI) rose +3.14% to +27.57% YTD, with both ETFs significantly outpacing U.S./International Equities.

IPOX Price Returns (%) Last Week Q2 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 2.72 5.54 17.71
IPOX Global (IPGL30) 2.79 8.07 18.78
IPOX International (IPXI)* 3.30 9.24 26.17
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 2.73 7.44 20.64
IPOX 100 U.S. (IPXO)* 1.80 3.86 11.79
IPOX 30 U.S. (IPXT) 1.64 4.62 12.45
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) 2.64 4.95 18.22
IPOX Nordic (IPND) 2.90 8.64 17.46
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 1.82 2.99 12.59
IPOX China C. (IPXUCHCHP)* 4.01 10.06 28.48
IPOX China (CNI) 3.60 4.62 23.08

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOU7]).

Global deal-flow review and outlook: Most deals rise based on final offer, record number of IPOs lined up. 10 notable accessible global (non-China A shares) firms debuted last week, with the average (median) equally-weighted stock adding +12.11% (+14.29%) based on the difference between the final offering price and the week’s close. While the week’s largest deal, the IPO of Malaysia-based chemicals maker Lotte Chemical Titan (TTNP MK: -1.39%) disappointed, most of the other larger IPOs closed the week well supported, including Taiwan-based electrical components maker H.K-traded FIT Hon Teng (6088 HK: +19.63%), while the good reception to Italian banking IPO doBank (DOB IM: +13.89%) underlines strong momentum for deals in the sector. A large number of firms across diversified industries and size groups are lined up for the upcoming week, including Swiss-based energy management systems solutions provider Landis+Gyr Group (LAND SW), Mainland China based Zhongyuan Bank (1216 HK ) or Singapore based fiber network operator NitLink NBN (NETLINK SP). U.S. deals include biotech services provider Calyxt (CLXT US), specialty pharma maker Kala Pharma (KALA US) or health club operator YogaWorks (YOGA US).

Traded IPOs (week of July 10, 2017) Country
Akcea Therapeutics Inc United States
Aspire Global PLC Sweden
CPM Group Ltd/HK Hong Kong
doBank SpA Italy
Dongguang Chemical Ltd Hong Kong
FIT Hon Teng Ltd Hong Kong
Lotte Chemical Titan Holding Bhd Malaysia
Nexus Infrastructure PLC Britain
S&P International Holding Ltd Hong Kong
V One Tech Co Ltd South Korea
Upcoming IPOs (week of July 17, 2017) Country
Atacadao Distribuicao Comercio e Industria Brazil
B Grimm Power PCL Thailand
Calyxt Inc United States
Inner Mongolia Energy Engineering Co Ltd Hong Kong
Kala Pharmaceuticals Inc United States
Landis+Gyr Group AG Switzerland
Milestone Builder Holdings Ltd Hong Kong
NetLink NBN Trust Singapore
PetIQ Inc United States
Reach New Holdings Ltd China
TPG RE Finance Trust Inc United States
Transtech Optelecom Science Holdings Ltd Hong Kong
Win Win Way Construction Holdings Ltd Hong Kong
YogaWorks Inc United States
Zhongyuan Bank Co Ltd 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.

Disclosure: the author has no position in the stocks mentioned.

This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.

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