The IPOX® Week, December 20th, 2021

December 20, 2021

• IPOX® Indexes retreat, follow benchmarks lower during Q4/2021 expiration week.
• Biotech holdings rise amid increase in COVID and COVID variant cases and more IPO M&A.
• IPOX® SPAC (SPAC) sheds -2.29%. 15 new SPACs launched in the U.S. last week.
• Large IPOs close week below final offer price. Saudi and small IPOs in Japan in focus.

Weekly Summary: Amid big intra-day swings across the benchmarks, lower long-term U.S. yields and higher equity risk (VIX: +15.41%), the IPOX® Indexes declined during Q4 ’21 Futures and Options expiration week. After staging a strong recovery into the weekend, e.g., the IPOX® 100 U.S. Index (ETF: FPX) – key benchmark for the performance of IPOs and Spin-offs – still shed -3.20% to -0.14% YTD, in line with the Nasdaq 100 (NDX: -3.25%). In the IPOX® 100 U.S. (ETF: FPX), 63/100 portfolio holdings declined, with the average (median) equally weighted stock recording a loss of -1.74% (-1.71%), in line with last week’s performance of U.S. small caps. Amid index re-balancing, declines extended to markets abroad, including Europe (ETF: FPXE) and Europe’s

IPOX® Europe ETF (ETF Ticker: FPXE) Investing since 2018

Nordic region, as well as Asian Pacific markets. Here, the IPOX® 100 Europe (ETF: FPXE) dropped by -2.50% to +4.19% YTD, a large -246 bps. more than when compared to the European market. Indiscriminatory selling linked to select China-linked health care and information technology stocks, as well as profit taking ahead of the New Year pressured both the IPOX® China (CNI) and IPOX® Japan (IPJP), e.g.

IPOX® Portfolio Holdings in focus:  A reversal in sentiment for global biotechnology firms ahead of year-end amid an increase in global COVID- and COVID variant cases and more IPO M&A benefited select IPOX® biotech exposure. Companies with significant upside focus included French biotech Valneva (VLA FP: +13.04%), 04/2020 IPO Zentalis Pharma (ZNTL US: +12.42%), 04/2021 IPO Swiss-based Polypeptide (PPGN SE: +9.52%) and 05/2019 IPO Britain-based Bicycle Therapeutics (BCYC US: +8.24%). Amid the continuous re-rating of global car makers, we also note another good (relative) week for 10/2021 IPO Swedish car maker Volvo Car (VOARB SS: +7.46). With end-of-year repositioning and tax loss selling in full swing, losses ran deep across many unseasoned companies in the more speculative high growth sectors such as IPOX® heavyweight Europe’s payment processor Adyen (ADYEN NA: -10.12%), gaming platform Roblox (RBLX US: -11.64%), lender Upstart Holdings (UPST US: -13.42%) and car vending machine operator and used car dealer Carvana (CVNA US: -17.44%).

* Basis for CME-traded e-mini IPOX® 100 U.S. Futures (IPOH2). *also available In UCITS format in Europe in EUR (EFPX IM,), USD (IPXE LN), and GBP (FPX LN). 

IPOX® SPAC INDEX (SPAC):  The index fell -2.29% to -16.49% last week to -16.49% YTD and +24.04% since Its 7/30/2020 launch. SPAC news include: 1) 11 SPACs Announced Merger Agreement include a) SVF Investment Corp 3 (SVFC US: +0.81%) with warehouse robotics and automation system provider Symbotic; b) Spring Valley Acquisition (SV US: +0.50%) with nuclear energy firm NuScale Power and c) AEA-Bridges Impact Corp (IMPX US: +1.52%) with Harley-Davidson EV Motorcycle spin-off LiveWire. 2) 5 SPACs Approved Business Combinations Include a) Isos Acquisition with bowling centers operator Bowlero (BOWL US; -1.94%); b) Investindustrial Acquisition (IIAC US: +2.33%) with Italian apparel company Ermenegildo Zenga (ZGN: 12/20) and c) CM Life Sciences III (CMLT US: -1.32%) with biotech EQRx (EQRX US: TBD). 3) SPAC terminated merger agreement include SCVX with robotics electronics manufacturing software provider Bright Machines. 4) 15 new SPACs launched in the U.S. last week.

WEEKLY GLOBAL Deal-flow Review and Outlook:  19 IPOs launched globally last week, with the average equally weighted deal adding +4.56% based on the difference between the respective final offer price and Friday’s close. Large IPOs all slipped from their respective IPO price, including U.S. software provider Samsara (IOT US: -2.96%), Japanese payment firm Net Protection (7383 JP: -20.55%) and Chinese logistics behemoth Hangzhou SF Intra-city Industrial (9699 HK: -9.38%). Amid the Christmas holiday season, U.S. and European IPO markets are expected to stay quiet, while Saudi food company Almunajem Foods (ALMUNAJE AB) and a list of small Japanese IPOs are lined up to go public overseas. Other IPO news Include a) Indonesia’s GoTo Group (Gojek/Tokopedia) preps for IPO; b) social media firm Reddit and London-based private equity firm TPG filed for an IPO.

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Source: https://www.lightspeed.com/active-trading-blog/the-ipox-week-december-20th-2021/