I participated in debt allocation. Will it hit the limit down?

I am Duan Shuai, a convertible bond investor specializing in in-depth research on convertible bond investments. Welcome to follow me!

Today’s Review:

Today, major stock indices experienced volatility and adjustments, but they surged back at the close. The Shanghai Composite Index rose 0.85%, returning above 4100 points. Shenzhen Component Index increased by 0.21%, the ChiNext Index fell 0.4%, and the STAR Market Index declined 1.2%. The entire market saw 3,254 stocks advance, with 77 hitting the daily limit up. There were 2,130 stocks decline, with only 14 hitting the limit down. The number of advancing stocks exceeded the declining ones, and in the last half hour, the market rallied across the board. The total daily turnover was 2,481 billion yuan, down 63.3 billion from yesterday. Although trading volume has been decreasing, the market hasn’t worsened, likely because many funds are preparing to rest before the New Year.

Regarding ETFs, coal stocks surged by 9.07% today, which likely contributed to the Shanghai Composite Index closing higher. Gold continued its rebound, rising 4.4%. The photovoltaic sector also performed strongly, up 3.12%. Conversely, gaming and telecommunications stocks declined by over 3%, and semiconductors and chips fell more than 2%.

Convertible Bonds:

There are a total of 373 convertible bonds in the market. Among them, 191 declined, with the largest drop being Oufeihua Convertible Bond down 16.77%. Next were Dingjie Convertible Bond and Napei Convertible Bond 02, both falling about 13%. On the other hand, 180 bonds rose, with the top performer being Weidao Convertible Bond, up 9.62%. Followed by Yanpai Convertible Bond and Shuangliang Convertible Bond, both rising over 7%. The other gains were relatively small.

The Convertible Bond Index today dipped slightly by 0.45%, a minor adjustment compared to nearly a 3% increase yesterday. The median price remained around 140 yuan, indicating most of the decline was in high-priced bonds. Looking at recent performance, the convertible bond market has entered a correction phase. The February trend will definitely differ from January, but the current correction isn’t severe enough to make operations difficult—either adding positions at reasonable prices or holding back due to small gains. The market traded 87.3 billion yuan today.

Today’s Observation:

Haitian Shares’ convertible bond will be available for subscription tomorrow. Buying the underlying stock today allows participation in bond allocation. According to the announcement, the convertible bonds will be issued soon, and the stock price has hardly moved. The day after the announcement, the stock even dipped briefly. Today, the price hovered around 12.7 yuan all day like a weaving machine, only starting to inch upward after 2:30 pm.

On January 28, I bought 800 shares at 11.8 yuan as a bottom-fishing move. The stock immediately rose afterward, leaving no chance to add more during the dip. Today, I reduced my holdings by 400 shares, leaving 400 shares for bond allocation. My cost basis is now only 11 yuan, providing a high safety margin. I estimate that tomorrow, the bond’s maximum decline will be about 1 yuan. Since the bond price has been relatively flat these past two days, the decline shouldn’t be too much. Currently, I expect to sell the bond at around 160 yuan, earning a profit of 600 yuan. As long as the decline stays within 1 yuan, this bond allocation will be profitable. Looking forward to seeing how the underlying stock performs after the bond is allocated tomorrow.

Summary of Important Convertible Bond Information:

1. Yanpai Convertible Bond 123243: Announced yesterday that there will be no early redemption for three months. The stock continued to rise 3.82% today, and the bond surged 7.7%, reaching a high of 199 yuan. Previously, the market’s premium rate for this bond was quite low, but now it’s around 8%, which is reasonable. The future performance mainly depends on the stock.

2. Shuangliang Convertible Bond 110095: The stock continued its 10% daily limit up today, and the bond also rose over 7%. The premium rate is only about 3%, and with this continuous rise, there may be more good opportunities ahead.

3. Napei Convertible Bond 02 123265: A relatively new bond, the stock plummeted 17% today, nearly hitting the limit down during trading. The company announced the termination of its acquisition of a copper, gold, and silver mine in Colombia. The recent surge was likely due to that acquisition, which is now canceled, causing the bond to drop 13%. The bond is still priced at 186 yuan, which I think is a bit high, and there may be opportunities to buy back later.

4. Shantai Convertible Bond 127112: Will be listed tomorrow, with an issuance scale of 1.73 billion yuan and a restricted scale of 630 million yuan, leaving about 1.1 billion yuan in circulation. The stock has not moved since the bond issuance. The current conversion value is only 89 yuan, with a reasonable price estimated between 130-135 yuan. Market sentiment will influence the specific price, but recent new bonds have performed well. If it can reach over 140 yuan, I plan to sell.

5. Haitian Convertible Bond 113700: Subscription opens tomorrow with an issuance scale of 801 million yuan. If the major shareholder fully participates, the tradable scale will be about 320 million yuan. I have participated in the bond allocation; remember to manually operate the subscription tomorrow, or it will be considered forfeited.

6. Honglu Convertible Bond 128134: The company finally proposed a reduction yesterday after five previous refusals. It’s about to mature in 0.67 years. I don’t understand why they didn’t reduce earlier. The market still prices it at 130 yuan, but I think that’s too high even with a reduction. The remaining time is short, and the industry isn’t very active. Of course, current bonds are expensive, so this one is too. As long as it can be redeemed at 130 yuan, there’s still profit.

Today’s Performance:

Today, the convertible bond ETF declined by 0.12%. My comprehensive strategy account increased by 0.33%, and this month’s gain is 0.37%.

I didn’t do much today—just halved my position in Haitan Shares and kept the other half for bond allocation. I watched the market all day but didn’t see any good opportunities. I’m not very good at T+ trading, so I didn’t make many moves!

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