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The IPOX® Week, May 15, 2017

  • China-linked tech exposure propels IPOX International to another big week. IPOX 100 U.S. consolidates.
  • FPXI” ETF extends weekly winning streak to Seven.
  • Review of week’s global deals: 1/3 of deal’s close week below final offer price. Upside focus on Nordic region.

China-linked tech exposure propels IPOX International to another big week. IPOX 100 U.S. consolidates. The IPOX Indexes traded mixed last week the with the IPOX Global 50 (IPGL50) – benchmark for the performance of the largest and best performing global IPOs and Spin-offs over the past four years – gaining +0.19% to +12.80% YTD, in line with the global market. Amid mixed earnings and profit taking after the big-run up, the divergence of returns within IPOX Indexes Universe, however, was significant: While strong earnings in China-linked technology exposure propelled the large-cap centric and highly liquid IPOX International to the seventh week of gains in a row, up +1.73% to +19.40% YTD, significant selling in select holdings after weak earnings and weak U.S. small-caps pressured the IPOX 100 U.S. (IPXO), with the key benchmark for U.S. New Listings declining by -1.10% to +8.19% YTD. Amid solid IPO and Spin-off deal flow across the region, we continue to note the strength in the IPOX Nordic (IPDN), which added +1.11% to +12.18% YTD last week. Stocks in focus across the IPOX Indexes universe included U.S. e-commerce play Wayfair (W US: +25.06%) and China-linked e-logistics firm JD.com (JD US: +13.36%), snack food maker Zhou Hei Ya International (1458 HK: +13.00%) and social networker Weibo (WB US: +10.18%), while U.S. social networker Snap (SNAP US: -17.46%), German specialty chemicals maker Bayer Spin-off Covestro (1COV GY: -9.78%) or U.S. consumer Financial GE Spin-off Synchrony Financial (SYF US: -7.06%) declined significantly following disappointing corporate reports.

“FPXI” ETF extends weekly winning streak to Seven. While AUM in IPOX-linked ETFs rose last week, ETF performance mirrored the mixed tendency across the IPOX Indexes Universe: For example, the IPOX 100 U.S. Index-(IPXO)-linked, 5-star, 732 million First Trust U.S. Equity Opportunities ETF (FPX) fell to +8.50% YTD, while the First Trust International IPO ETF (FPXI) – composed of the largest and most liquid non-U.S.-domiciled IPOs and Spin-offs ‘going public’ over the past four years – extended its massive performance run to +19.92% YTD.

IPOX Price Returns (%) Last Week Q1 2017 2017 YTD
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) 0.19 8.33 12.80
IPOX Global (IPGL30) 0.72 7.37 13.24
IPOX International (IPXI)* 1.73 11.49 19.40
Exposure: United States
IPOX Composite U.S. (IPXC)* 0.26 9.26 12.98
IPOX 100 U.S. (IPXO)* -1.10 6.12 8.19
IPOX 30 U.S. (IPXT) -1.29 5.90 8.00
Exposure: Europe/Nordic Region
IPOX Europe (IXTE) -0.85 9.03 16.56
IPOX Nordic (IPND) 1.11 3.84 12.18
Exposure: Asia-Pacific/China Region
IPOX Asia-Pacific (IPTA) 1.14 8.32 9.43
IPOX China C. (IPXUCHCHP)* 2.53 11.44 17.26
IPOX China (CNI) 3.13 11.52 15.70

* 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]).

Review of week’s global deals: 1/3 of deal’s close week below final offer price. Upside focus on Nordic region. At least 18 notable global IPOs (non A-share Chinese deals) started trading last week with the average (median) equally-weighted stock gaining +3.90% (+2.85%) based on the difference between the final offering price and the week’s close. Initial performance of the deals was notably mixed, with 1/3 of deal flow closing the week below offer, including Seoul-listed Financial ING Life (079440 KS: -6.06%), while Stockholm-listed industrial Instalco Intressenter (INSTALL SS: +17.27%) and U.S. real estate developer Five Point Holdings (FPH US +14.00%) led the weekly performance ranking in larger deals. Focus during the upcoming week is on non-U.S. domiciled New Listings, including China-linked Financial BOCOM International (3329 HK) and Norway’s transportation services provider Fjord AS (FJORD1 NO).

Traded IPOs (week of 05/08/2017) Country
ADES International Holding Ltd UAE
ASV Holdings Inc United States
China Everbright Greentech Ltd Hong Kong
Five Point Holdings LLC United States
Gardner Denver Holdings Inc United States
Global Ports Holding PLC Great Britain
Guaranty Bancshares Inc/TX United States
ING Life Insurance Korea Ltd South Korea
Instalco Intressenter AB Sweden
Kamux Corp Finland
Koninklijke Volkerwessels NV Netherlands
National Energy Services Reunited Corp United States
Netmarble Games Corp South Korea
Prodways Group SA France
Real Matters Inc Canada
Solaris Oilfield Infrastructure Inc United States
Veritone Inc United States
Yangzhou Guangling District Taihe Rural MF China
Upcoming IPOs (week of 05/15/2017) Country
Argenx SE Netherlands
BOCOM International Holdings Co Ltd China
Bright Scholar Education Holdings Ltd China
Fjord1 AS Norway
G1 Therapeutics Inc United States

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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