The IPOX® Week, July 4, 2016

  • IPOX Indexes stage massive re-bound on plunging risk, most IPOX Regional Indexes outperform markets.
  • More global deal flow prices, record solid initial gains.
  • Amid shortened U.S. trading week, few deals lined up.

IPOX Indexes stage massive re-bound on plunging risk, Most Regional IPOX Indexes outperform markets. In what records as one of the most historic moves in recent history, the IPOX Indexes staged a massive rally off late Monday’s closing lows, as Brexit fears subsided, rates dropped and volatility sank. In the U.S., e.g., the IPOX 100 U.S. (IPXO), underlying for the 5-star, First Trust U.S. IPO ETF (FPX), gained +3.32% to -0.77% YTD, even outpacing the surging S&P 500 (SPX), the key gauge for U.S. stocks. A big re-bound in the hard-hit extra sensitive Brexit linked exposure was most notable, with drug makers IPOX heavyweights Shire (SHPG US: +12.03%) and AbbVie (ABBV US: +4.76%) leading the way. Long liquidation selling in U.S. Consumer Financials pressured ING-Spin-off Voya Financial (VOYA US: -7.04%) anew. In the IPOX 100 U.S. (IPXO), 82/100 portfolio holdings gained on the week, with the average (median) equally-weighted holding rising +2.66% (+2.86%), significantly less than when compared to the applied market-cap weighted IPOX 100 U.S (IPXO) index. Strong relative performance was also recorded by the IPOX Regional Indexes, including the IPOX Nordic (IPND), IPOX Asia-Pacific (IPTA) and IPOX China (CNI), while the big slump in Dutch Financial ABN Amro (ABN NA: -10.17%) pressured the IPOX Europe (IXTE) anew.

IPOX 100 U.S. -linked Investing since April 2006:

More global deal flow prices, few deals lines up. At least 11 notable firms IPO’d in the accessible (non-China A Shares) markets last week, with the average (median) equally-weighted deal gaining +83.58% (+7.55%) based on the difference between the final offering price and the close on the week. While just one IPO priced in the U.S. (RNDB US: +21.90%), IPOs in Japan picked up with franchise café operator KOMEDA (3543 JP: +0.31%), nursing care services provider Solasto (6197 JP:-11.38%) and online furniture sales firms Vega (3542 JP) going public, ahead of the dual USD billion 1.1 IPO of Japanese media firm LINE (LN US) with book-building for the firm set to end July 8th. Amid the shortened U.S. trading week, two health care-related firms add to the list of IPOs set to take place in the U.S. (GEMP US, TCMD US), while at least four deals of small/mid-caps (8291 HK, 1549 HK 8229 HK, 8292 HK) are lined up in the Hong Kong market, ahead of a slew of more deals set for the week of July 11th.

IPOX Returns (%) (P) Week 2015 YTD 16
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 2.87 0.99 -8.05
IPOX Intern. (IPXI)* 2.44 -5.85 -8.87
Exposure: United States (USD)
IPOX US Comp. (IPXC) 3.52 -3.90 -0.23
IPOX 100 U.S. (IPXO)* 3.32 1.57 -0.77
IPOX 30 U.S. (IPXT) 3.66 4.91 -1.07
Exposure: Europe (EUR)
IPOX Europe (IXTE) -0.42 14.41 -13.98
IPOX Nordic (IPND) 1.89 23.88 -5.03
Exposure: Asia-Pacific (Developed) (USD)
IPOX Asia-Pacific (IPTA) 3.47 -2.32 -0.95
Exposure: China (USD) (x A-Shares)
IPOX China (CNI) 1.82 -9.10 -10.12

*Basis for Exchange-Traded Products (ETPs)

IPOs (week of June 27): Ticker Return (%)
Career Co Ltd 6198 JP 225.13
China Digital Video Holdings Ltd 8280 HK -20.00
Investis Holding SA IREN SW 7.55
KOMEDA Holdings Co Ltd 3543 JP 0.31
Li Bao Ge Group Ltd 8102 HK 542.25
MaxFast Properties AB MAXF SS 4.72
Planigrupo LATAM SAB de CV PLANI* MM 0.00
Provide IT Sweden AB PROVIT SS 81.25
Randolph Bancorp Inc RNDB US 21.90
Solasto Corp 6197 JP -11.38
Vega Corp Co Ltd 3542 JP 67.63
IPOs (week of July 4): Ticker Sector
ALT Telecom PCL ALT TB Telecom S.
China Golden Classic Group 8281 HK Consumer D.
Ever Harvest Group 1549 HK Industrials
Future Data Group Ltd 8229 HK Info Tech.
Gemphire Therapeutics GEMP US Health Care
PNC Technologies Co Ltd 237750 KS Info Tech.
Tactile Systems Technology TCMD US Health Care
Quartiers Properties AB QARTMTFP SS Financials
Worldgate Global Logistics 8292 HK Industrials

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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