The IPOX® Week, July 24, 2017

  • Most IPOX Indexes extend gains, outpace markets. Weakness in European equities leaves IPOX Europe (IXTE), IPOX Nordic (IPND) on top.
  • IPOX-linked ETFs close week at record. Assets rise.
  • Global Deal-flow Review and Outlook: Large number of deals start trading, more IPOs lined up.

Most IPOX Indexes extend gains, outpace markets. Weakness in European equities leaves IPOX Europe (IXTE), IPOX Nordic (IPDN) on top. Amid renewed weakness in the U.S. dollar vs. the Euro, most IPOX Indexes extended their gains during U.S. option expiration week with the IPOX Global (IPGL50) adding +0.79% to +18.64% YTD, outpacing global equities for a 3rd week in a row. In the cross-section, most of the IPOX Regional Indexes continued to trade well: In the U.S., e.g., a good week in hard-hit bandwidth infrastructure services provider Zayo (ZAYO US: +8.07%), Consumer Financial Synchrony (SYF US: +4.72%) or IL-based drug maker Abbvie (ABBV US: +2.08%) more than offset the negative impact of stocks including social networker Snap (SNAP US: -5.17%), with the IPOX 100 U.S. (IPXO) adding +0.84% to +12.73% YTD, well ahead of most U.S. equities. Amid renewed currency vows and the sell-off in German carmakers caused by collusion allegations towards the weekend affecting European equities, we note the big relative performance gains in favor of the IPOX Europe (IXTE) and IPOX Nordic (IPND) last week. Stocks in focus here continued to be IPOX heavyweight luxury carmaker Ferrari (RACE US: +6.52%), while German online shoe seller Zalando (ZAL GY: -9.79%) or Dutch lighting products maker Philips Lighting (LIGHT NA: -6.52%) fell sharply.

IPOX-linked ETFs close week at record. Assets rise. Last week, IPOX-linked ETFs mirrored the underlying strength in the IPOX Indexes, closing at a fresh record, respectively: The U.S.-focused USD million 852 First Trust U.S. Equity Opportunities ETF (FPX), e.g., added +0.83% to +13.16% YTD. Amid a big jump in assets, the First Trust International IPO ETF (FPXI) added +1.35% to +29.29% YTD. The NASDAQ-traded “FPXI” ETF focuses on providing exposure to the largest, most liquid and best performing global IPOs and Spin-offs by applying the IPOX® Indexes Technology.

IPOX Price Returns (%) Last Week Q2 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.79 5.54 18.64
IPOX Global (IPGL30) 0.93 8.07 19.83
IPOX International (IPXI)* 0.98 9.24 27.40
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* 0.62 7.44 21.40
IPOX 100 U.S. (IPXO)* 0.84 3.86 12.73
IPOX 30 U.S. (IPXT) 0.81 4.62 13.36
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.78 4.95 17.29
IPOX Nordic (IPND) -1.24 8.64 16.00
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.66 2.99 13.22
IPOX China C. (IPXUCHCHP)* 0.38 10.06 28.93
IPOX China (CNI) 0.89 4.62 24.14

* 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: Large number of deals start trading, more IPOs lined up. A massive 27 notable accessible global (non-China A shares) firms debuted last week, with the average (median) equally-weighted stock adding +21.74% (+8.00%) based on the difference between the final offering price and the week’s close. The week’s largest deals debuted lackluster, including China-linked Zhongyuan Bank (1216 HK: +1.63%), Singapore-based fiber network operator Netlink NBN (NETLINK SP: -0.62%) or Swiss-based Toshiba-owned smart meter firm Landis+Gyr (LAND SW: +0.64%). Upside focus was on Jeffries-led dog & cat wellness products maker ID-based USD million 469 PetIQ (PETQ US: +45.75%). Significant firms set to “go public” this week include Poland’s telecom Play (PLAY PW) [priced at the low end], Tel Aviv-traded energy firm Tamar Petroleum (TMRP IT) or UK-based apparels designer Quiz (QUIZ LN).

Traded IPOs (week of July 17, 2017) Country
Atacadao Distribuicao Comercio e Industria Brazil
B Grimm Power PCL Thailand
Calyxt Inc United States
Glenalta SpA Italy
Inner Mongolia Energy Engineering Co Ltd Mongolia
JOST Werke AG Germany
JSB Co Ltd Japan
Kala Pharmaceuticals Inc United States
Landis+Gyr Group AG Switzerland
NetLink NBN Trust Singapore
PetIQ Inc United States
Sprintitaly SpA Italy
Supermarket Income Reit PLC Britain
Wealthy Way Group Ltd Hong Kong
Zhongyuan Bank Co Ltd China
Upcoming IPOs (week of July 24, 2017) Country
Biotoscana Investments SA Luxembourg
Greencoat Renewables PLC Ireland
Play Communications Poland
Quiz PLC Britain
RBB Bancorp United States
Redfin Corp United States
Sienna Biopharmaceuticals Inc United States
Tak Lee Machinery Holdings Ltd Hong Kong
Tamar Petroleum Ltd Israel

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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