The IPOX® Week, November 12, 2018

  • IPOX Indexes focused on Developed Markets record strong week. IPOX China (CNI) falls. Earnings season drives big return dispersion, select Japanese exposure & IPOX Market Neutral set YTD highs.
  • IPO Deal-flow Review & Outlook: U.S. IPO market sees pickup in activity. Utah-based tech unicorn Qualtrics International (XM US) bought out ahead of listing debut.

IPOX Indexes focused on Developed Markets record strong week. IPOX China (CNI) falls. Most IPOX Indexes rose for a 2nd week, driven by firmer Europe and the perceived positive outcome of the U.S. Mid-term election. Similar to last week and ahead of U.S. option expiration week, sentiment soured towards the week-end as traders took profits amid FED-driven stubbornly stable U.S. yields. While the IPOX China (CNI) reversed last week’s strength, upside focus within the IPOX Universe was on Developed Markets exposure, with the IPOX Asia-Pacific (IPTA), IPOX Europe (IXTE) and IPOX 100 U.S. (IPXO) all recording solid gains in line or exceeding the performance of the respective benchmarks, with the IPOX 100 U.S. (IPXO) closing significantly above the key 3000 level anew. Amid earnings and significant swings in volatility, the dispersion of returns amongst the individual IPOX portfolio holdings remained big, propelling the IPOX Market Neutral Strategies to close the week at fresh YTD highs. In the U.S., e.g., strong gains in fitness club operator Planet Fitness (PLNT US: +13.87%) or cable services provider Altice USA (ATUS US: +12.83%) and a very strong week for large pharma were partially offset by the big drop in IT services provider Conduent (CNDT US: -31.55%) or social networker Match (MTCH US: -18.10%). We also note big relative gains in the IPOX Asia-Pacific (IPTA) benefiting from the surge in select Japan-traded small- and mid-caps, including pharma products maker Sanbio (4592 JP: +56.90%), nursing care services provider Solasto (6197 JP: +16.64%) or revolving sushi restaurant chain operator Sushiro Global (3563 JP: +7.43%).

IPOX® 100 U.S. Investing with the ‘FPX’ ETF since 2006

Select IPOX-linked investment products performance: Last week, the USD billion 1.1 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) added +1.49% to +1.39% YTD, while its international version (FPXI) rose +0.35% to close -8.69% YTD. The actively managed Catalyst IPOX® Allocation Fund (OIPAX) added +1.11% to close +5.07% YTD higher.

Select IPOX® Indexes Returns (%) Last Week 2017 2018 YTD
IPOX® Long-Only: Global/International
IPOX® Global (IPGL50) (USD) -0.54 28.59 -5.05
IPOX® International (IPXI)* (USD) -0.57 37.80 -10.14
IPOX® Long-Only: United States
IPOX® Composite U.S. (IPXC)* +1.05 33.64 +0.98
IPOX® 100 U.S. (IPXO)* +1.39 26.04 +0.96
IPOX® 30 U.S. (IPXT) +2.11 26.63 -1.28
IPOX® Long-Only: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) +0.91 19.27 -4.49
IPOX® Nordic (IPND) (EUR) -1.38 17.91 -7.65
IPOX® 100 Europe (IPOE)* (USD) +0.01 41.77 -9.09
IPOX® Long-Only: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) +1.60 23.30 -2.23
IPOX® China (CNI) (USD) -4.31 37.67 -17.92
IPOX® Japan (IPJP) (JPY) +3.09 N/A N/A
IPOX® Market Neutral
Beta Neutral Strategy: Yes No
IPOX® Market Neutral Asia-Pacific** X +10.96
IPOX® Market Neutral Europe** X +17.85
IPOX® Market Neutral U.S.** X +9.19
IPOX® Market Neutral Global** X +11.05

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures [Symbol: IPOZ8]. ** Live since 03/18.

IPO Deal-flow Review & Outlook: U.S. IPO market sees pickup in activity with Utah-based tech unicorn Qualtrics International (XM US) gearing up for launch. 7 small caps debuted last week across accessible global regions, with the average (median) equally-weighted company adding +4.73% (+9.00%) based on the difference between the final offering price and Friday’s close. Biggest winner of the week was Chinese property management firms Xinchengyue (1755 HK: +14.14%). Priced at the low-end, the undersubscribed deal rose based on final offer. We note Sunday’s announcement of the buy-out of Utah-based SaaS company Qualtrics International (XM US), a key rival of recent IPO survey software firm SurveyMonkey (SVMK US: -10.25% YTD based on final offer and -36.65% YTD based on fist close) ahead of its listings debut. The firm was purchased for $8.0 billion by Germany’s SAP AG (SAP GY: +0.48%). The Sequoia-backed firm aimed for a $5.0 billion valuation at its IPO, double from its ca. $2.5 billion valuation a year ago. Still lined up is Nova Ljubljanska Banka (NLBR SV), the largest bank in Slovenia. This IPO is commitment made in exchange for the European’s Commission’s approval of state aid to the bank back in 2013.

Select IPOs traded (week: 11/05/2018) Domicile
CNFinance Holdings Ltd China
Garofalo Health Care SpA Italy
Northeast Rubber PLC Thailand
Xinchenyue Holdings Ltd China
Select IPOs expected (week: 11/12/2018) Domicile
Centrexion Therapeutics Corp United States
Ever Reach Group Holding Co Ltd China
Nova Ljubljanska Banka Slovenia

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