Core Viewpoint - Oriental Asset has increased its stake in Shanghai Pudong Development Bank (SPDB) through the purchase of common shares and convertible bonds, which is expected to improve the financial statements of asset management companies (AMCs) [1][2] Group 1: Stake Increase - As of September 29, Oriental Asset holds 1.073 billion shares of SPDB, representing a 3.44% stake, and 8.6 million convertible bonds [1] - Oriental Asset was not among the top ten shareholders of SPDB as of the end of Q2, indicating a significant increase in holdings during Q3 [1] - The board of SPDB has agreed to nominate Ji Hongmei, currently the Party Secretary of Oriental Asset's Shanghai branch, as a candidate for the bank's board [2] Group 2: Financial Reporting Benefits - AMCs benefit from investing in bank stocks as it can improve their financial statements due to the use of equity method accounting for long-term equity investments [2][3] - The equity method allows AMCs to recognize the difference between the fair value of identifiable net assets and the initial investment cost as non-operating income, positively impacting current profits [3] - As of October 9, SPDB's price-to-book ratio is 0.53, suggesting that Oriental Asset's investment could enhance its non-operating income and improve financial statements [3] Group 3: Convertible Bond Concerns - SPDB issued 50 billion yuan in convertible bonds in October 2019, maturing on October 27, 2025, with an outstanding balance of 24.572 billion yuan yet to be converted [4] - Successful conversion of the bonds would supplement the bank's core Tier 1 capital, while failure to convert would require repayment of principal and interest [4] - The market is closely watching whether Oriental Asset will replicate the "Everbright model" by increasing its stake in SPDB's convertible bonds to alleviate repayment pressure [4]