SchusterWatch #761 (11/18/2024)
Most IPOX® Indexes weaken as yield pressure builds.
2 weeks that were: A look at IPOX® 100 U.S. Portfolio Holdings Returns.
Bespoke IPOX® Nordic (IPND) big weekly outlier as Spotify surges.
U.S. market remains quiet ahead of holidays. BNPL giant Klarna files IPO.
IPOX® INDEXES: Most IPOX® Indexes declined during U.S. option expiration week as 1) U.S. government and corporate yields rose in tandem with equity risk (VIX: +8.03%) on the back of strong U.S. economic data and FED caution over the speed of perceived interest rate cuts, 2) Pressure rose on health care and government-related services exposure on fears over perceived spending cuts envisioned by the upcoming U.S. administration driving profit taking after the big run-up and 3) trading in international equities remained lackluster.
IPOX® 100 U.S. (ETF: FPX): In the United States, the MAG7-free IPOX® 100 U.S. (BBG: IPXO), tracked by the world’s largest IPO-focused ETF (Ticker: FPX) and CME listed IPOX® 100 U.S. emini Futures (IPOZ4), e.g., shed -2.98% to +26.16% YTD, +308 bps., +495 bps. and +1251 bps. YTD ahead of the S&P 500 (SPX), Nasdaq 100 (NDX) YTD and small-cap gauge Russell 2000 (RTY), respectively. Amid earnings, AppLovin’s (APP US: +0.37%) ascend into the QQQs, Palantir’s (PLTR US: +12.64%) NYSE to NASDAQ listings transfer news and a short seller report hitting software stock Zeta (ZETA US: -50.59%), the weekly return distribution across IPOX® 100 U.S. portfolio stocks narrowed from the previous week, with the average (median) equally-weighted stock dropping by -5.08% (-4.31%).
This was significantly worse when compared to the applied market-cap weighted IPOX® 100 U.S. for a 2nd week in a row, underlying the impact of big gains amongst the larger and highly liquid portfolio holdings (see Chart above). Health care exposure, government contractors and select Financials ranked amongst the worst performers, including IT services providers Amentum (AMTM US: -24.55%) and Parsons (PSN US: -13.57%), as well as health care/biotech stocks Vaxcyte (PCVX US: -18.60%), Kymera Therapeutics (KYMR US: -17.64%) and Krystal Biotech (KRYS US: -14.46%). Higher mortgage rates and lackluster corporate results also pressured Financial Rocket Cos. (RKT US: -14.30%), while big gains in crypto propelled discount broker Robinhood (HOOD US: +5.38%) further towards back its 2021 IPO price ($38). We note the great relative week in the ESG-tilted version (IPXT) of the IPOX® 100 U.S., shedding just -2.10% to +44.81% YTD.
MOST IPOX® INDEXES FOCUSING ON NON-US. STOCKS LAGGED LAST WEEK, IPOX® NORDIC (IPND) OUTLIER: Pressured by big selling in key stocks towards the weekend, declines extended to our universe of non-U.S. domiciled stocks pooled in IPOX®. E.g, the IPOX® International Index (ETF: FPXI) declined by -3.38% to +14.27% YTD, while the IPOX® 100 Europe (ETF: FPXE) shed -3.74% to +14.80%, both lagging their respective benchmarks. Across our Canadian-domiciled exposure, the IPOX® Canada (ICDX) shed -0.52% to +32.57% YTD, while the IPOX® MENA (IPEV) recorded its worst week since the end of September, dropping by -3.05% to +10.59% YTD, both also lagging the benchmarks. Driven by a surge in IPOX® Heavyweight online music platform operator Sweden-based Spotify (SPOT US: +14.39%) recording a fresh weekly post-IPO high after reporting another blockbuster earnings report, the IPOX® Nordic (IPND) added +0.12% to +21.42% YTD, making it the sole positive outlier within the range of IPOX® Global Indexes last week. Alternative energy play Germany’s Siemens Energy (ENR GY: +18.90%), UAE builder Emaar Development (EMAARDEV DB: +17.01%), Saudi infrastructure construction services provider Salik (SALIK UH: +7.52%), Australia’s gaming machine manufacturer IPO M&A Aristocrat Leisure (ALL AT: +4.80%), Japanese alternative beverage maker Lifedrink (2585 JP: +24.55%) and Financial Services Provider Rakuten Bank (5838 JP: +13.26%) were other IPOX® Holdings setting fresh weekly post-IPO highs last week.
GLOBAL ECM REVIEW AND OUTLOOK: 22 listings launched globally last week, raising $4.5 billion. The average/median IPO gained +44.88%/+5.24% from offer price to Friday’s close. Standout listings included the $1.7 billion raise of MENA supermarket chain Lulu Retail (LULU UH: -0.49%) in Abu Dhabi and food delivery firm Swiggy (SWIGGY IN: +10.44%) after raising $1.4 billion in a buoyant Indian IPO market. While the U.S. IPO market remained quiet post-election, Spanish renewable energy firm Cox Group (COXG SM: -7.14%) dropped on a downsized $175m offer, priced at bottom. Brazilian fertilizer firm Brazil Potash plans to raise $70 million in the U.S. on Thursday.
Read the IPOX® Update on the latest IPO news, including the upcoming blockbuster listing of $20 billion Buy-Now-Pay-Later giant Klarna.
Please check in on www.ipox.com or visit our Linkedin for updates.