The IPOX® Week, October 01, 2018

  • Most IPOX Indexes record strong quarterly gains.
  • IPOX-linked Investment Products Performance update.
  • IPO Deal-flow Review & Outlook: During active week for global deals, U.S. IPOs trade mixed, China & Japan-linked IPOs decline. More deal flow lined up.

Most IPOX Indexes record strong quarterly gains. Amid higher U.S. interest rates, a weak EUR and continued uncertainty over global trade, the IPOX Indexes finished last week mixed, however, recorded strong quarterly gains. Top of the quarterly IPOX Indexes Performance Table ranked the IPOX Indexes focusing on Developed Asia Pacific (e.g. IPOX Japan [IPJP] and IPOX Asia-Pacific [IPTA]) which surged and also outpaced the regional benchmarks, followed by the IPOX U.S. (IPXC, IPXO and IPXT) and the IPOX Europe (IXTE, IPND). While falling prices for China-linked exposure had no impact on the flurry of China-linked IPO activity in Hong Kong and the U.S., the IPOX China (CNI) recorded significant outsized quarterly losses. Upside focus amongst the IPOX Micro Sectors continued to be on firms linked to payment processing, with U.S. traded payment processors Square (SQ US: +60.63%), Worldpay (WP US: +23.83%), First Data (FDC US: +16.91%) or PayPal (PYPL US: +5.49%), as well as European-traded Adyen (ADYEN NA: +49.02%) all recording significant quarterly gains. We also note a big quarter for many Japan-traded IPOX Holdings, including owner professional services firm Recruit (6098 JP: +23.68%), logistics company SG Holdings (9143 JP: +22.51%), as well as the 2015 government privatizations including Japan Post Insurance (7181 JP: +18.22%) and Japan Post Holdings (6178 JP: +11.46%). Social media exposure diverged sharply last quarter: While Tinder-owner Match (MTCH US: +49.48%) surged from strength to strength, sentiment for Twitter (TWTR US: -34.83%) and Snap (SNAP US: -35.22%) deteriorated. We also note the continued dismal trading performance of global consumer staples, including IL-based ketchup maker Kraft Heinz (KHC US: -12.27%).

All IPOX-linked Investment Products record strong quarterly gains. For example, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) rose +4.12% last quarter to +9.44% YTD, while its international version (FPXI) added +1.51% last quarter to +0.58% YTD. “FPX” and “FPXI” provide investors with diversified access to the “going public” effect associated with the largest U.S. (FPX) and international (FPXI) New Listings, often a pure proxy for growth and innovation.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 5.36 28.59 5.24
IPOX International (IPXI)* 0.77 37.80 -1.07
Exposure: United States (USD) (Price)
IPOX U.S. Composite (IPXC)* 2.57 33.64 8.61
IPOX 100 U.S. (IPXO)* 4.07 26.04 9.14
IPOX 30 U.S. (IPXT) 3.87 26.63 5.42
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe 30 (IXTE) 2.94 19.27 4.51
IPOX Nordic (IPND) 3.31 17.91 2.87
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 5.98 23.30 5.05
IPOX China (CNI) -9.79 37.67 -4.06
IPOX Japan (IPJP) 5.59 N/A N/A

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOZ8].

IPO Deal-flow Review & Outlook: During active week for global deals, U.S. IPOs trade mixed, China & Japan-linked IPOs decline. More deal flow lined up. A massive 19 firms debuted last week across accessible global regions, with the average (median) equally-weighted firm adding just +0.43% (+0.00%) based on the difference between the final offering price and Friday’s close. For example, while U.S. based survey software market SVMK (SVMK US: +33.58%) surged based on final offer, VC-backed antibiotics drug maker Entasis Therapeutics (ETTX US: -27.47%) plummeted, becoming the worst first-day performer and worst biotech IPO debut YTD. Outside the U.S., Chinese hotpot chain Haidilao (6862 HK: +0.00%) closed its first week of trading unchanged, while investment bank China Renaissance (1911 HK: -29.25%) plunged. Japanese deals including clothing manufacturer World Co. (3612 JP: -7.59%) and insurance company SBI Insurance Group (7326 JP: -10.74%) also fell. Focus in Europe was on the successful listing of PE-backed Swiss aseptic carton packaging company SIG Combibloc (SIGN SW: +9.33%), the largest listing in Switzerland YTD. October will start with a solid pipeline in the U.S., with online freelancer marketplace Upwork (UPWK US), SoftBank-backed cancer blood-testing company Guardant Health (GH US), eye diseases target biopharmaceutical company Kodiak (KOD US) and search software developer Elastic (ESTC US) set to commence trading.

Select IPOs traded (week: 09/24/2018) Domicile
Arco Platform Brazil
Arvinas Holding Company LLC United States
Gritstone Oncology Inc United States
Haidilao International Holding China
LAIX Inc. China
SBI Insurance Group Co Ltd Japan
SVMK Inc United States
Urovant Sciences Inc. Britain
World Co Ltd Japan
Select IPOs expected (week: 10/01/2018) Domicile
Elastic NV United States
Guardant Health Inc United States
Hana Pharm Co Ltd South Korea
Kodiak Sciences Inc United States
Upwork Inc United States

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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