The IPOX® Week #645

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IPOX® Indexes fall as global rates rise, growth stocks underperform.
STOXX selects 5 IPOX® portfolio holdings for index membership.
Stratospheric initial returns in select U.S.-traded Micro-cap IPOs continue.
One sizable deal IPOs last week, H.K.-traded Hongjiu Fruit (6689 HK) to IPO.

WEEKLY IPOX® performance review: The IPOX® Indexes fell for a 3^rd week, as the fear over the negative impact of higher interest rates across the globe and renewed strength in the U.S. dollar trumped a solid U.S. employment report as markets position for Q3 U.S. Futures roll and expiration. In the U.S., e.g., the IPOX 100 U.S. (ETF: FPX) declined -4.03% to -28.92% YTD, in line with the Nasdaq 100 (NDX) and lagging the S&P 500 (SPX) by -74 bps. Declines extended to markets abroad, including the IPOX® International (ETF: FPXI), IPOX® Europe (ETF: FPXE) and IPOX® MENA (IPEV) which outperformed anew. Notable is the continued relative bid in the M&A-focused IPOX® Growth Infusion (GNDX) with YTD spreads adding +16 bps. to +646 bps. YTD vs. the S&P 500 (SPX) last week.

ipox® Portfolio holdings in focus: Amid earnings (and muted outlooks), high-growth (and loss-making) firms, chip makers and profit taking in energy stocks contributed most to the declines, such as application software maker Gitlab (GTLB US: -25.02%), chip maker SiTime (SITM US: -14.57%), electric car maker Li Auto (LI US: -12.28%), security software provider Crowdstrike (-11.36%), accounting software maker Bill.com (-10.75%), Latin America e-commerce platform operator Dlocal (DLO US: -7.94%) and Norway’s oil and gas explorer Var Energi (VAR NO: -7.06%). Health care IPO M&A recorded notable gains, including biotechs United Therapeutics (UTHR US: +3.53%) and Ionis Pharma (IONS US: +2.10%).

global ipo deal flow review and outlooK: One sizeable IPO launched internationally last week. Pre-clinical cancer treatment developer Biocytogen Pharmaceuticals Beijing (2315 HK) gained +7.45% based on the difference between the final offering price and Friday’s close. In the U.S., four microcap IPOs were completed last week. The $6m IPO of Cannabis cigarette maker Hempacco (HPCO US) declined by -6.00%, while cancer treatment developer Shuttle Pharmaceuticals (SHPH US, $10m offer) and BioAffinity Technologies (BIAF US, $8m offer) gained +83.38% and +15.10%, respectively. Most notably, Wednesday saw the OTC-to-Nasdaq uplisting of Chinese garment manufacturing company Addentax (ATXG US: +27.87%), which surged +13030% Wednesday before dropping -95% on Thursday.

One sizable IPO is expected to launch this week. Chinese fruit wholesaler Hongjiu Fruit (6689 HK) raised $63m in its Hong Kong IPO, which will trade on Monday. The company will be the only listed in the city this week, as talent agency YH Entertainment Group (2306 HK) reportedly withdrew its $144m offer over a valuation dispute.

Other news include: 1) IPOX® International (ETF: FPXI) heavyweight Aramco plans to take a stake in Renault’s (RNO FP) combustion engine unit ahead of a possible EV split. 2) IPOX® International (ETF: FPXI) constituent Chinese game distributor NetEase, buys French developer of upcoming Star Wars game, Quantic Dream. 3) IPOX® 100 Europe (ETF: FPXE) members Encavis, Darktrace, Alfen, ACCIONA Energia and Tietoevry to join STOXX Europe 600 Index. 4) Porsche to hire former Mercedes executive, as IPO plans could be unveiled this week. 5) Egypt plans to raise more then $4bn through 10 privatizations by the end of the year. 6) Chinese battery maker CALB delays approval hearing for $2bn H.K. IPO. 7) Several IPOs of Chinese EV makers are lining up: Leapmotor, Weltmeister and Hozon each plan to raise at least $1bn in H.K. by year-end, while Geely-backed Zeekr mulls U.S. listing at $9bn valuation. 8) 3M’s health care spinoff plans face hurdle over faulty earplugs lawsuit. 9) Italy to sell flag carrier ITA Airways to Delta, France-KLM and U.S. fund Certares after Lufthansa bid is rejected. 10) Rio Tinto secures control of giant copper mine in Mongolia after buying out Canadian Turquoise Hill for $3.3bn. 11) Bain Capital buys scientific unit of Japanese optics firm Olympus for $3.1bn.

The IPOX® SPAC (SPAC): The IPOX® SPAC index fell by -3.63% to -16.79% YTD. IPOX® SPAC Leaders recording big upside/downside include aftermarket service firm Aersale (ASLE US): +7.20%, while media content marketplace Getty Images (GETY US: -44.78% plunged. Other SPAC news from last week: 1) 3 SPACs Announced Merger Agreement include East Resource Acquisition (ERES US: -0.22%) with life insurer Abacus Life. 2) No SPACs Approved Business Combination last week. 3) 1 SPAC terminated merger include North Mountain Merger (NMMC US: +0.30%) with procurement and AP/AR software Corcentric. 4) 2 SPACs opted to liquidate include a) Ackrell SPAC Partners (ACKIT US) at $10.38/share and b) Warrior Technologies Acquisition (WARR US) at $10.01/share. 5) No SPAC launched last week in the U.S.