SchusterWatch #766 (12/23/2024)
Wild expiration week leaves IPOX® 100 U.S. on Top of Performance Rankings.
Other IPOX® Indexes suffer losses but outperform, as rates soar.
Capping methodology shields IPOX® from bigger Novo-inflicted losses.
Chipmaker Kioxia surges. Fintech Chime files IPO. FedEx plans spin-off.
IPOX® INDEXES: The IPOX® Indexes recorded broad declines during Fed week, however, generally outperformed the slumping benchmarks as 1) fears over a premature end of the U.S. rate cut cycle drove massive expiration-driven swings in bonds, stocks and equity risk (VIX: +32.95%) ahead of the holiday season as 2) the plunge in Danish drug maker Novo Nordisk (NVO US: -20.52%) - weighted at >25% by index provider MSCI in its highly followed Nordic benchmark – reverberated across global equity markets during Friday’s early trading.
IPOX® 100 U.S. (IPXO): In the U.S., the MAG7 / FANG-free IPOX® 100 U.S. - tracked by the world’s largest New Listings-focused ETF (Ticker: FPX) and CME listed IPOX® 100 U.S. emini Futures (IPOH5) – fell just -1.42% to +28.66% YTD, leaving the index significantly ahead of all diversified U.S. equity benchmarks, including the S&P 500 (+57 bps.), Nasdaq 100 (+83 bps.), Russell 2000 (+303 bps.) and S&P Mid-Cap (+325 bps.). Thursdays gain in the index in a declining market underlined once more IPOX’s powerful asset allocation potential and the indexes role as a useful market signal. 73% of portfolio holdings fell last week with the average (median) equally-weighted stock dropping by -2.54% (-2.69%), worse than when compared to the applied market-cap weighted index. Firms which left the index as of Friday’s close ranked towards the bottom of the weekly performance rankings, while e-marketing solution provider Klaviyo (KVYO US: +12.85%), healthcare IT platform operator Doximity (DOCS US: +10.91%) and de-SPAC social network operator Grindr (GRND US: +9.97%) soared.
OTHER IPOX® INDEXES: The IPOX® Indexes focused on markets outside the U.S. held up relatively well last week, with IPOX’s® more conservative weightings methodology shielding the indexes from more significant losses inflicted by aforementioned IPO M&A Danish drug maker behemoth Novo Nordisk after disappointing trial results. Specifically, the IPOX® 100 Europe (ETF: FPX) and the IPOX® Nordic (IPNDT) outperformed their benchmarks by +83 bps. and massive +459 bps., respectively, last week. Select U.K.-based portfolio holdings continued to trade well anew, including hardware maker Raspberry Pi (RPI LN: +22.86%).
IPOX® SPAC INDEX (SPAC): The Index fell -0.18% last week, bringing its year-to-date performance to +8.14%. Nvidia-backed voice AI company SoundHound AI (SOUN US: +28.65%) climbed higher on strong momentum. Telehealth platform Hims & Hers Health (HIMS US: -12.72%) continue to decline on FDA declaration of end to Eli Lilly’s weight-loss drug shortage. One SPAC announced to definitive merger agreement: Four Leaf Acquisition (FORL US: 0.00%) to combine with Chinese self-service car washing company Xiaoyu Dida Interconnect International on undisclosed term. In other de-SPAC news, blockchain fintech company Nukkleus (NUKK US) went “to the moon” this week, gaining an astonishing +2,778.42% after taking a stake in a company involved with Israel’s Iron Dome missile system. One new SPAC was launched in the U.S. this week.
GLOBAL ECM REVIEW AND OUTLOOK: Last week witnessed a surge in global IPO activity, with 52 firms commencing trading and collectively raising $4.4 billion. The average IPO experienced a gain of +31.00%, while the median gain stood at +14.52%. India's IPO market remains robust, exemplified by the performance of Vishal Mega Mart (VMM IN: +29.73%), which was this year's 4th largest IPO in the country, raising $952 million. In accessible markets outside of India and Mainland China, the long-awaited listing of Japanese memory chipmaker Kioxia (285A JP: +17.18%) led in deal size, raising $686 million following conservative pricing. In general, the Tokyo market saw a raw flurry of significant activity, with 5 IPOs raising a total of $918 million last week. Activity before year-end seems to be predominantly focused on the Hong Kong Stock Exchange, where catering firm Xiaocaiyuan (999 HK: +13.65%) raised $111 million. An additional 5 larger deals are scheduled to conclude by December 30 on the HKEX, anticipated to raise approximately $500 million. Notably, U.S. IPO activity was subdued ahead of the holidays with no sizable listings.
IPO NEWS: Read the latest IPOX® Update for last week’s most significant IPO News. In the U.S., Fintech Chime filed confidentially. Databricks' substantial $10bn private funding potentially delays its IPO, while FedEx explores a freight division spin-off IPO. Looking abroad, battery maker CATL mulls a $5bn Hong Kong listing, while the London Exchange is set for two welcome boosts: Greek multinational METLEN plans a multi-billion IPO and past fashion giant Shein is set to raise over $6 billion. Expanding business, UK regulators plan a private share trading platform.
