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On September 8th, Daiwa issued a research report stating that Bilibili (09626.HK) issued US$700 million in zero-coupon convertible bonds maturing in 2031, while Tencent (00700.HK) completed the sale of its entire approximately 9.6% stake. The bank views this innovative win-win-win structure positively, believing it eliminates Tencents long-standing pressure to cash out, brings Bilibili approximately US$400 million in new funds, and limits equity dilution through the immediate US$300 million share buyback and cancellation. The report states that Bilibili has used US$300 million of the proceeds to buy back shares. Based on the initial conversion price of the convertible bonds (approximately 35.2 million shares), the total dilution is approximately 8.4%. However, after deducting the immediate cancellation of the repurchased shares, the net dilution is limited to approximately 3.5%. The bank reiterated its buy rating on Bilibili. The bank believes the benefits outweigh the drawbacks because it immediately eliminates Tencents selling pressure and raises long-term zero-coupon funds at a cost far lower than ordinary offshore bonds.Songyan Power: Officially launched Scalabot, a general-purpose embodied intelligence technology brand. Scalabot is dedicated to building the core capabilities of robots to understand the world, predict the future, and act autonomously, bringing intelligence from models to the real world.The Icelandic government summoned the U.S. ambassador to Iceland after Trump posted a map on social media that included Iceland within the U.S. territory.On September 8th, Citigroup issued a report stating that Nikes adjustment of its China distribution strategy starting in January 2027 is expected to negatively impact Topsports (06110.HK) business prospects for fiscal year 2028 (ending February 2028). Currently, the bank is not highly confident that Nike will continue to subsidize Topsports online distribution rights after the current fiscal year (ending February 2027). The bank lowered its net profit forecasts for Topsports for fiscal years 2027 to 2029 by 2%, 19%, and 18% respectively, while its sales forecasts were lowered by 1%, 5%, and 5% respectively. Based on an unchanged target P/E ratio of 11x for each historical year ending in 2027, the target price was lowered from HK$1.91 to HK$1.7. The bank maintains its "Buy" rating, considering the stocks double-digit dividend yield. The relative preference order for the Chinese sportswear sector remains unchanged: Anta (02020.HK) > Li Ning (02331.HK) > Topsports, all with "Buy" ratings.On September 8th, Futures News reported that Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman reaffirmed their commitment to maintaining market stability, deciding to keep their daily crude oil production quotas for October at the same level determined in September 2026. OPEC+ will continue to hold monthly meetings to monitor market dynamics, with the next meeting scheduled for October 4th, 2026. Previously, the production quotas of these seven OPEC+ countries had increased for six consecutive months, and member countries are still working to determine new production quotas. During these six months, the organization gradually lifted production cuts, and the market still has sufficient capacity to absorb the increased oil supply. However, despite the significant increase in production quotas, the Strait of Hormuz is blocked due to the war between the US and Iran, and Russian crude oil exports are also restricted due to Western sanctions. In other words, since these seven countries crude oil is mainly for export, the increased quotas are meaningless given the export restrictions.

WTI crude oil drifts above $80.00 amidst a US Dollar rebound and supply shortage concerns

Alina Haynes

Apr 10, 2023 14:16

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In the early hours of Monday, purchasers of WTI crude oil struggled to maintain the price above $80.70 as risk aversion and hawkish Fed forecasts bolstered the US Dollar. However, threats to Oil supplies, primarily emanating from China and OPEC+, appear to keep purchasers of black gold optimistic.

 

US Dollar Index (DXY) reverses a four-day downtrend near 102.25 despite the inability of US Treasury bond yields to recover due to recession concerns. However, US 10-year and 2-year Treasury bond yields remain under pressure near 3.37 percent and 3.95 percent, respectively. In doing so, the benchmark bond coupons extend the previous day's losses and illustrate the market's flight to protection in response to concerns of an economic decline.

 

In spite of this, the recent disappointing US data reignite concerns of a recession in the world's largest economy and challenge the optimists in the energy sector. However, the positive US Nonfarm Payrolls (NFP) data enabled Fed hawks to return to the table and renew demands for a 0.25 percentage point rate hike in May. The same constrains the value of the US dollar and stimulates demand for WTI crude oil.

 

On the other hand, geopolitical concerns surrounding China, particularly after the dragon nation's military exercises near Taiwan, combine with last week's unexpected OPEC+ production cut to keep Oil purchasers optimistic.

 

China's willingness to defend the global economy through robust monetary and fiscal easing at home also enables Oil purchasers to maintain optimism in the face of optimism among the world's largest Oil consumers.

 

The Easter Monday holiday in spot markets may limit Oil price movements, but the investors appear to be out of steam, so US inflation and Fed Minutes will be closely monitored for signs of a pullback.


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