2026-3-5 Convertible Bond Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the riskiest, as all positive factors and opinions are already priced in, and no new buyers will appear…

The safest and most profitable investments are made when no one likes a certain asset. Over time, once it gains popularity, its price can only move in one direction: up!

Since personal convertible bond holdings are below 45% of the total portfolio, already at the minimum holding limit, I do not plan to reduce positions proactively. However, last week I was still forced to cut holdings, so maintaining the position is indeed challenging…

Market performance yesterday:

The previous trading day: Convertible bonds fell, A-shares declined, U.S. stocks rose, FTSE A50 increased. U.S. stocks and markets in Japan and South Korea have already opened and surged. External factors continue to influence; will the rebound today sustain?..

The convertible bond index dropped from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2695, with a median of 139.4, temperature at 90.9 degrees. There are 268 bonds above 130 yuan, 7 fewer than the previous day, accounting for 73.6%. Bonds below 110 yuan total 11, unchanged from the previous day, with prices at a low of 0 and a high of 4. March saw 3 green and 0 red convertible bonds. Total convertible bond trading volume was 78 billion, up 1.2 billion from the previous day, with a turnover rate of 15.5%, reaching 700 billion for the sixth consecutive day. The index fell 5 points to 2695, with an average price of 160.8, down 0.5 from the previous day. The median premium is 32.4%, down 0.5. A-shares traded 23,882 billion yuan, 8 billion less than the previous day. Yesterday opened low and rose, then slightly fluctuated, ending with a small decline. Sentiment remains high; some traders are doing T+0 trades to maintain positions.

Yesterday, Hongbo led with a 5.63% increase. Trading concentration increased, with the top 5 bonds accounting for 20.4% of total convertible bond trading volume, with the highest single trade at 4 billion. Most bonds saw decreased activity, with the number of bonds traded below 10 million dropping from 1 to 1; representing 0.3% of the market, with the minimum amount rising from 8.19 million to 9.26 million yuan.

Today’s convertible bond and market updates:

Feng 21, Shouhua, Tianjian last trading day; Changgao convertible bonds: subscription on March 9; Tongling Technology: new stock listed on Beijing Stock Exchange…

Haineng, Zhonghuan 2 reduced holdings; Jinlang 2 company account system to ship by end of March; Haohan signed an equity agreement with Yiwei Aviation…

Today, Diao Garden is expected to meet the redemption condition in about a day; today, Wu is also expected to meet the condition in about a day, possibly triggering a downward adjustment.

No new bonds or stocks are listed today, no new bond or stock subscriptions. Focus today: whether convertible bonds can rebound and stabilize, etc.

Hua Ya, Yubang, and other trends remain positive; continue to monitor; pay attention to relatively low-priced stocks like Garden, Aidi, Jingrui 2, Huaxing, etc.

Summary of information:

1. Two domestic conferences will open today; Premier Li Qiang will deliver the government work report.
2. Expected hot topics: Power grid equipment (Jin 05, Jingda, Huachen, Jazeera, Yubang), Space photovoltaic (Shuangliang, Fu 22, Aowei, Dier, Reco, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Zhizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian), Commercial aerospace (Guanglian, Zhan 22, Huatian, Shenyu, Mengsheng, Hangyu); Chemical industry (Baichuan 2, Hongqiang, Jinjii, Heda, Qixiang 2), Chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu), Photoresists (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and related concepts.

Yesterday, convertible bonds opened high and then declined slightly, with increased trading volume. Today, an expected moderate rise; thematic speculation opportunities exist. Overall prices and premiums are relatively high, with some traders doing T+0 trades.

Last weekend’s bond selection (personal record, not investment advice): Due to high median levels, I relaxed the selection criteria! Overall quality improved compared to last week, considering volatility capacity. Still optimistic about the market and prepared to hold some convertible bonds, focusing on relatively low prices and small caps, preferably with rich concepts and active trading, mainly for broad allocation, not for single-position recommendations.

1. Micro-cap bonds around 130 yuan (under 300 million) can be included: Silk Road…

2. Bonds under 150 yuan, under 200 million, with limited downward volatility, high potential for premium, high upper limit, small retracement, excluding recent strong redemption risks: Ailv, Haibo…

3. Relatively low-priced, low-premium bonds around 145 yuan, with about 30% premium, maturity of 0.5-5.5 years, suitable for swing trading: Tianhao, Jinpu, Wantian, Qiangli, Lantian, Wanquan, Mino, Yinwei, Lihes…

4. Aggressive low-priced bonds around 150 yuan, with about 20% premium, under 500 million, ensuring a certain risk-reward ratio: Hengfeng, Fengshan…

5. Pure offensive bonds, with about 15% premium, around 160 yuan, scale of 400 million, excluding those likely to be redeemed within two weeks: None…

6. Defensive bonds, with moderate premiums around 70%, not heavily reliant on downward adjustments, under 1 billion, with yields around -3%, rich in concepts: Zhibang, Gongtong, Kesi, Baichang, Xineng, Zhejiang Construction…

7. Personally focused on active, concept-rich, reasonably priced bonds with good flexibility, usually around 145 yuan: Kelan, Shanshi, Lihes, Jingrui 2, Yirui, Jintian, Hongwei, Weitang, Chaosheng, Mino, Mingli, Bainiu…

8. Bond-type bonds for those unwilling to hold cash: Shenhao, Fuhan, Jiete, Lige, Jiankang, Shou 22, Li Zi, Huoxing, Tai 21, Yuxing…

Recent adjustments in convertible bonds include some meeting redemption conditions in a few days, but some may not, with premiums already reduced, such as Diao, Garden, Hongqiang, Huaxing, Weitang, Hangxin, Guangli, Sanjiao, Aidi, Jinjii, Changhai…

Current market conditions show significant redemption pressure, limiting upper bounds, so avoid overly expensive bonds.

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride volatility, adopt a whack-a-mole approach, use wide positions instead of deep, hedge risks, pursue average returns, and consider conditional orders and grid trading to utilize volatility. Do not recommend specific holdings; all selections are personal summaries. Investing involves risks; enter cautiously.

Stay true to the original purpose of convertible bonds. Currently, they are very suitable for retail investors. Convertible bond investing is a marathon; stick to the right path, stay away from hype. This is the truth and the cause-and-effect. All actions are like illusions, like dreams, bubbles, or lightning. Observe with equanimity, do not dwell anywhere, and cultivate the right mind. Water droplets may be tiny, but they gradually fill a large vessel…