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The IPOX® Week, June 12, 2017

  • Ahead of expiration, IPOX Indexes trade mixed.
  • IPOX International, IPOX Europe and IPOX China continue to record relative performance jump.
  • Global deal-flow review and outlook: Significant deal flow lined up, Hong Kong and Europe in focus.

Ahead of expiration, IPOX Indexes trade mixed: The IPOX Indexes traded mixed last week with the IPOX Global (IPGL50) – the global IPO and Spin-off benchmark which currently pools USD trillion 1.2 of market capitalization tied to the largest, most liquid and best performing global IPOs and Spin-offs using the IPOX Indexes Technology – declining by -0.82% to +15.15% YTD, -26 bps. more than when compared to the global market. Returns diverged sharply within the IPOX Regional Universe: While the weak Nasdaq pressured the IPOX U.S. (IPXO and IPXT) into the week-end, relative returns in the IPOX International (IPXI), IPOX Europe (IXTE) and IPOX China (IPXUCHCP, CNI) soared anew. For example, big momentum in firms including lighting products maker Spin-off Philips Lightning (LIGHT AS: +8.17%), Dutch Financial ASR Nederland (ASRNL NA: +5.15%) or German online shoe seller Zalando (ZAL GY: +4.52%) drove the IPOX Europe (IXTE) to a gain of +0.12% on the week, now a massive +1288 bps. ahead of the European market YTD. One of the biggest news of the week belonged to China-linked e-commerce behemoth 2014 IPO Alibaba (BABA US: +12.33%), the most heavily weighted IPOX Indexes member: Strong gains in the firm after raising its outlook for revenue and in real estate developer Future Land Development (1030 HK: +21.25%) helped the IPOX China Indexes (IPXUCHCP, CNI) to record a massive relative performance jump, for example. In the U.S., the IPOX 100 U.S. (IPXO) fell sharply as the Nasdaq weakened and strong gains in biotech Kite Pharma (KITE US: +16.29%) or beleaguered Antero Resources (AR US: +9.25%) could do little to offset the impact of big declines in select holdings including industrial HDS Supply (HSD US: -24.02%) or social networker Snap (SNAP US: -14.27%). In all, 63% of IPOX 100 U.S. Index (IPXO) stocks fell on the week with the average (median) equally-weighted firm declining by -0.98% (-0.90%), less than when compared to the applied market-cap weighted index.

IPOX Price Returns (%) Last Week Q1 2017 YTD 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) -0.82 8.33 15.15
IPOX Global (IPGL30) 0.47 7.37 16.53
IPOX International (IPXI)* 0.47 11.49 23.25
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.70 9.26 16.45
IPOX 100 U.S. (IPXO)* -1.33 6.12 9.94
IPOX 30 U.S. (IPXT) -1.47 5.90 10.22
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 0.12 9.03 19.51
IPOX Nordic (IPND) -0.26 3.84 13.20
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) -0.65 8.32 11.65
IPOX China C. (IPXUCHCHP)* 3.74 11.44 23.43
IPOX China (CNI) 1.49 11.52 18.43

* 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: IPOM7]).

IPOX-linked select ETF performance update: The 11-year, USD million 825, IPOX 100 U.S. Index (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) declined to +10.08% YTD last week, while the jump in aforementioned stocks drove the First Trust International IPO ETF (FPXI) to another positive week, gaining +0.10% to 24.98% YTD, its 10th consecutive weekly gain. The “FPXI” ETF is tied to the IPOX International (IPXI) and currently pools USD trillion 1.10 of market cap tied to the largest 50 IPOs and Spin-offs domiciled outside the U.S. using the IPOX Indexes Technology.

Global deal-flow review and outlook: Significant deal flow lined up, Hong Kong and Europe in focus. 5 significant (non China-A share) IPOs debuted last week with the average (median) equally-weighted firm adding +22.98% (+2.58%) based on the difference between the final offering price and the week’s close, with the week’s largest deal (Banco del Bajio) closing above offer. Focus during the upcoming week is on IPOs traded outside the U.S.: Top of the list ranks H.K.-traded drug maker Wuxi Biologics (2269 HK) which priced its IPO at the top of the range and collecting USD million 511 in the process. Other deals include French vehicle services provider ALD (ALD FP), Norway’s Financial Sparebank 1 Oestlandet (SPON NO) or the IPO of high-end fashion firm Mani Jeans on the Istanbul Stock Exchange.

Traded IPOs (week of 06/05/2017) Country
AEW UK Long Lease Reit PLC Britain
Banco del Bajio SA Mexico
Plymouth Industrial REIT Inc United States
Risecomm Group Holdings Ltd Hong Kong
Silmaasema Oyj Finland
Upcoming IPOs (week of 06/05/2017) Country
ALD SA France
Athenex Inc United States
Avenue Therapeutics Inc United States
Balta Group NV Belgium
Boston Omaha Corp United States
G & M Holdings Ltd Hong Kong
Kin Shing Holdings Ltd Hong Kong
Mani Jeans Turkey
Sparebank 1 Oestlandet Norway
TCG BDC Inc United States
Wuxi Biologics Cayman Inc 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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