The IPOX® Week, October 7, 2019

  • China-linked exposure leads IPOX to strong week. IPOX U.S. (ETF: FPX) and IPOX International (ETF: FPXI) record solid weekly gain, Brexit weighs on IPOX Europe (ETF: FPXE).
  • Meituan Dianping (3690 HK) soars to fresh post-IPO High.
  • Q3 2019 IPO Deal-flow Review & Outlook: Tepid third-quarter IPO market and unicorn valuation cut; Market set to rebound in Q4 with heavy IPO backlogs.

China-linked exposure leads IPOX to strong week. IPOX U.S. (ETF: FPX) and IPOX International (ETF: FPXI) record solid weekly gain, Brexit weighs on IPOX Europe (ETF: FPXE). Led by a big performance jump in the IPOX China (CNI: +1.63%) and good U.S. Economic numbers towards the week-end, the IPOX Indexes closed a volatile week – amid by the big weekly decline in U.K. stocks (UKX: -3.65%) as Brexit nears – on top of the weekly global equity benchmark performance rankings. For example, the IPOX International (ETF: FPXI) added +1.10% to +19.88% YTD, a massive +329 bps. ahead of its benchmark, while the IPOX 100 U.S. (ETF: FPX) added +0.19% to +21.44% YTD, +52 bps. and +149 bps. ahead of the S&P 500 (SPX) and Russell 2000 (RTY), respectively.

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

The strong rebound in select hard-hit U.S.-traded and relatively unseasoned exposure contributed to the strong showing, including 04/2017 IPO application software maker Okta (OKTA US: +20.06%), cybersecurity firm 06/2019 IPO CrowdStrike (CRWD US: +19.42%) and dental products maker 09/2019 IPO SmileDirectClub (SDC US: +13.23%). We also note another strong week for IPOX exposure seemingly insulated from global growth fears including H.K. listed firms such as IPOX International (ETF: FPXI) portfolio holdings hot pot restaurant operator 09/2018 IPO Haidilao International (6862 HK: +10.12%), Japans leading revolving sushi restaurant chain operator Sushiro Global (3563 JP: +4.73%) or IPOX International (ETF: FPX) heavyweight China shopping platform operator Meituan Dianping (3690 HK: +4.57%) which finished the H.K. trading week at a fresh post-IPO high.

IPOX-linked ETFs add to YTD gains last week: The IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities Fund (ETF: FPX) closed at +22.02% YTD, while the IPOX International (IPXI)-linked First Trust International Equity Opportunities Fund (ETF: FPXI) and the IPOX 100 Europe (IPOE)-linked First Trust IPOX® Europe Equity Opportunities Fund (ETF: FPXE) closed at +22.47% and +19.99% YTD, respectively.

Select IPOX® Indexes Price Returns (%) Last Week Q3 2019 2019 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) 0.53 -3.83 18.68
IPOX® International (IPXI)* (USD) 1.10 0.16 19.88
IPOX® Indexes: United States
IPOX® Composite U.S. (IPXC)* 0.01 -3.20 14.34
IPOX® 100 U.S. (IPXO)* 0.19 -2.63 21.44
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) -1.81 -1.75 19.32
IPOX® Nordic (IPND) -1.24 -0.58 20.08
IPOX® 100 Europe (IPOE)* (USD) -1.09 -3.21 16.22
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 0.12 -3.72 0.46
IPOX® China (CNI) (USD) 1.63 0.71 14.98
IPOX® Japan (IPJP)** (JPY) 0.57 0.46 0.22

* Basis for ETFs: FPX US, FPX LN, FPXE US, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures (IPOZ9). ** Live since 07/18.

Q3 2019 IPO Deal-flow Review & Outlook: Tepid third-quarter IPO market and unicorn valuation cut; Market set to rebound in Q4 with heavy IPO backlogs. At least 88 firms debuted in Q3 and raised ca. $28.13 billion with an average (median) initial return of +11.27% (+4.69%) in Markets open to global investors. The U.S. saw 42 IPOs that raised $12.6 billion in Q3. Political tensions stifled H.K. IPO activity as one of the most attractive IPO destination was down to 11 deals and $7.7 billion in proceeds. Beer giant AB InBev’s Budweiser (1876 HK) revival was the largest IPO of the quarter and boosted the H.K. market. The runner-up and third place went to TeamViewer (TMR GR), the largest European tech IPO in two decades and aforementioned SmileDirectClub (SDC US) respectively. Other high-profile IPOs include Swedish PE group EQT (EQT SS), indoor exercise bike maker Peloton (PTON US), Brazil’s largest IPO of the year, power distributor Neoenergia (NEOE3 BZ) and Israel’s Tel Aviv bourse’s IPO (TASE IT). Aside from a typical quiet quarter, Q3 saw a large valuation cut led by WeWork’s IPO fiasco and the disappointing aftermarket performance of some respective deals. Q4 is set off to a promising start. While Swiss Spirogen spin-off ADC pulled its planned offer, 5 IPOs debuted last week with the average (median) equally-weighted firm recording an initial return of +14.23% (+13.00%). Apollo-backed French glass manufacturer Verallia (VRLA FP), Dutch tech firm CM.com (CMCOM NA), European’s largest unlisted biotech company BioNTech (BNTX US), Thailand’s Financial Asset World Corp (AWC TB) and China’s biggest sportswear company Topsports International (6110 HK) are all set to debut this week.

Track Priced & Upcoming IPOs on https://ipox.com

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