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The IPOX® Week, March 20, 2017

  • IPOX Indexes build on momentum, IPOX China (CNI) has huge week as Meitu (1357 HK) rockets higher.
  • IPOX-linked Investment Products mirror strong gains.
  • Solid initial sentiment for global IPOs, deals gain across global regions.

IPOX Indexes build on momentum, IPOX China (CNI) has huge week as Meitu (1357 HK) zooms higher. The IPOX Indexes built on the YTD momentum and continued to record strong gains, with the IPOX Global (IPGL50) – benchmark for the “going public effect” in the largest global IPOs and Spin-offs – surging +1.84% to +8.79% YTD, outpacing the performance of global stocks as measured by the MSCI World Index (MXWD). While the IPOX Europe (IXTE) gave back some of its relative gains from the previous week, all other IPOX Indexes beat the market, including the IPOX 100 U.S. (IPXO) which closed the week +43 bps. ahead of the S&P 500 (SPX), main gauge for U.S. stocks. In individual stocks, the most noteworthy relative IPO performance trend continues to belong to the divergence of U.S.- vs. China-domiciled social media/networking stocks: While the U.S. stocks (FB US, TWTR US, SNAP US) continued to trade mixed at best, the respective Chinese deals including Momo (MOMO US: +13.74%), Weibo (WB US: 6.81%) and most notably USD billion 9.8 Meitu (1357 HK: +51.26%) rocketed higher on big volume and adding significant returns to the respective IPOX Indexes which count the stocks as a portfolio holding, such as the IPOX Global (IPGL50), IPOX International (IPXI) and IPOX China (CNI).

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

Select IPOX-linked Investment Products mirror big gains. In the U.S., the IPOX 100 U.S. (IPXO) – underlying benchmark for the USD million 696, 5-star, 10-year First Trust U.S. Equity Opportunities ETF (FPX) – added +0.77% to +6.72% YTD. Helped by exposure to aforementioned Meitu (1357 HK: +51.27%), the IPOX-linked First Trust International IPO ETF (FPXI) added +3.23% +11.21% YTD, ahead of other internationally focused ETFs.

IPOX Returns (%) (P) Week 2017 2016
Exposure: Global/International (xUS) (USD)
IPOX Global 50 (IPGL50) 1.84 8.79 -2.50
IPOX Intern. (IPXI)* 2.97 11.82 -4.63
Exposure: United States
IPOX Composite U.S. (IPXC)* 1.15 8.91 7.24
IPOX 100 U.S. (IPXO)* 0.67 6.50 5.89
IPOX 30 U.S. (IPXT) 0.37 6.24 8.44
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) 0.81 6.86 0.18
IPOX Nordic (IPND) 1.20 4.26 -1.59
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 1.89 8.32 -1.96
IPOX China C. (IPXUCHCHP)* 2.89 12.62 -3.73
IPOX China (CNI) 4.64 16.17 -10.21

* Basis for Exchange-Traded Products (e.g. FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOH7]).

Solid initial sentiment for global IPOs, deals gain across global regions. At least 10 significant global IPOs (excluding Chinese A-shares) commenced trading last week with the average (median) equally-weighted stock gaining +15.18% (+6.19%) based on the difference between the final offering price and Friday’s close. Most upside was recorded by specialty IPOs in the U.S. with focus on software maker MuleSoft (MULS US) and apparels maker dual-listed Canada Goose (GOOS US). More specialty IPOs are lined up for the upcoming week, including U.S. software maker Alteryx (AYX US), Swedish biotech MIPS (MIPS SS) or China-linked educational service provider Minshing Education Group (1569 HK).

Traded IPOs (week of 03/13/2017) Country
Ardagh Group SA LUXEMBOURG
Canada Goose Holdings Inc CANADA
China Organic Fertilizer Inc CHINA
Hospital Corp of China Ltd CHINA
MuleSoft Inc UNITED STATES
NI Holdings Inc UNITED STATES
ProPetro Holding Corp UNITED STATES
Prosegur Cash SA SPAIN
Winson Holdings Hong Kong Ltd HONG KONG
Upcoming IPOs (week of 03/20/2017) Country
Alteryx Inc UNITED STATES
Aumann AG GERMANY
Medica Group PLC BRITAIN
Minsheng Education Group Co Ltd CHINA
MIPS AB SWEDEN
Next Games Oy FINLAND
Sea Harvest Holdings Pty Ltd SOUTH AFRICA
Somerley Capital Holdings Ltd HONG KONG

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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