February 24, 2026 - Convertible Bond Rebalancing

Wishing everyone a smooth and prosperous Year of the Horse in your investments!!!

Investing is a popularity contest. Buying in when popularity is at its peak is the riskiest; at that time, all favorable 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 them. Given time, once a product gains popularity, its price can only move in one direction: up!

Since my personal convertible bond holdings are not a large proportion (less than 45% of the overall portfolio), I have reached the minimum holding limit and do not plan to reduce further. I will gradually adjust positions slowly. This week is the last trading week after the Spring Festival, observing whether there will be a red envelope market at the start of the year…

Market performance yesterday:

The previous trading day: convertible bonds down, A-shares down, US stocks down, FTSE A50 down…

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2775, with a median of 142.1, a temperature of 95.7 degrees. There are 282 convertible bonds above 130 yuan, 7 fewer than the previous day, accounting for 76.2%. Six below 110 yuan, one less than the previous day, with prices ranging from a low of 0 to a high of 7. In February, there were 5 green and 5 red convertible bonds. Total trading volume was 75.8 billion, 7.3 billion less than the previous trading day, with a turnover rate of 14.5%, marking the first day below 700 billion. The convertible bond index dropped 16 points to 2775, with an average price of 166.5, down 2 from the previous day. The median premium was 35.9%, slightly higher by 0.2. A-shares traded 19,991 billion, 1,700 billion less than the previous day. Yesterday opened high and moved higher, then dipped in the afternoon, ending with a moderate decline. Sentiment for convertible bonds remains high; some T+0 trading and position holding.

Yesterday, Weidao rose by 8%, leading gains. Trading concentration increased, with the top 5 traded varieties accounting for 26% to 29.1% of total convertible bond trading, with the highest single trade volume at 6.2 billion. Most varieties saw increased activity; the number of varieties with trading volume below 10 million increased from 1 to 2, representing 0.6% of the market, with the lowest amount from 8.04 million to 7.39 million.

Today’s convertible bond and market news:

Shuangliang, Julong, not callable, Haifeiman: new stock on Beijing Stock Exchange [subscription], February futures delivery date.

Shuangliang’s subsidiary won a 100 million yuan Middle East project. Zhongyuan 2: actual controller manipulated the market and was sentenced; Chunqiu reduced holdings; Qiaoyin halted 1 billion yuan AI project investment.

Conversion info: Xingfa converted 100 million; Shuangliang 140 million; Guanglian 40 million; Rong 23 20 million; Tianjian 37 million; Hongbai 27 million; Feng 21 13 million; Shouhua 17 million; Zhonghe 16 million; Guanzhong Diao 10 million.

Today, Youcai, Youfa, Diao, Huayuan, Weixin, Jiayuan are expected to meet the possible call redemption within one day; among them, Youcai has a higher probability of redemption; today, Lanfang is likely to meet the trigger for a potential price adjustment within one day.

No new bonds listed today, 1 new stock subscription, no convertible bond subscriptions. Focus today on whether Shuangliang’s multiple varieties of convertible bonds will be called.

Shuangliang not callable, at a 6% discount; observe if there’s an opportunity at market open. Fengyu’s underlying stock hit the daily limit, and its convertible bond surged yesterday; continue to monitor. Shangsheng, Haibo, Jingrui 2, and others show good trends; ongoing attention. Also watch KeLan, Yirui, Lantian, Wanshun 2, and other varieties.

Summary of information:

1. The US Supreme Court ruled tariffs illegal; Fed meeting shows significant divergence; overall good outside during Spring Festival.
2. Expected hot topics: power grid equipment (Jin 05, Jingda, Huachen, Jiazhe, Yubang), space photovoltaics (Shuangliang, Fu 22, Aowei, Dier, Ruike, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Yirui, Lantian, Wanshun 2), commercial aerospace (Guanglian, Zai 22, Huati, Shenyu, Mengsheng, Hangyu); chemical industry (Baichuan 2, Hongqiang, Jinjii, Heda, Hengyi, Qixiang 2); chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu); lithography (Jingrui 2, Huate, Huamao, Qiangli); plus humanoid robots and other concepts to keep an eye on.

Yesterday, convertible bonds opened low and declined moderately, with decreased trading volume; today is expected to see moderate gains, possibly a good start; thematic speculation opportunities exist. Overall prices and premiums of convertible bonds remain high, with some T+0 trading.

Last weekend’s bond selection (personal record, not investment advice): Due to high median levels, adjusted bond selection standards upward! 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, small caps, and concept-rich active varieties, mainly for broad allocation, not single-position recommendations:

1. Micro-sized (under 300 million) convertible bonds around 130 yuan: Jiali, Silk Road…

2. Slightly larger micro-sized (under 200 million) bonds around 150 yuan, limited downward volatility, capable of premium, high upper limit, less retracement, excluding recent potential call redemption: Ailu, Haibo…

3. Relatively low-priced, low-premium varieties around 145 yuan, with about 30% premium, 0.5-5.5 years remaining, good for swing trading: Tianhao, Jinpu, Wantian, Qiangli, Wanshun 2, ChaoSheng, Xingqiu, Wansun, Lantian…

4. Aggressive low-priced stocks around 150 yuan, with guaranteed profit/loss ratio, under 500 million, about 20% premium: Hengfeng, Fengshan…

5. Pure offensive, about 15% premium, around 160 yuan, scale 400 million, excluding those with potential call redemption within two weeks: None…

6. Defensive types, with moderate premiums around 70%, not fully reliant on price cuts, under 1 billion, yield around -3%, concept-rich: Zhibang, Gongtong, Kesi, Baichang, Xineng, Zhejiang Construction…

7. Actively watched by individuals, concept-rich, not too high prices, good elasticity, usually around 145 yuan: Kelun, Shanshi, Lihe, Jingrui 2, Hongbai, Yirui, Jintian, Hongwei, Weitang, Mino, Mingli…

8. Bond-type varieties, suitable for those unwilling to hold cash: Shenhao, Fuhan, Jiete, Lige, Jiankang, Shou 22, Kangyi, Lizhi, Yuxing…

Current market conditions show significant pressure from call redemptions, limiting upper bounds, so avoid overly expensive varieties.

Overall strategy: avoid deep research, focus on broad allocation, ride the waves, play whack-a-mole, use wide rather than deep, hedge risks, pursue average returns, and consider conditional orders and grid trading to utilize volatility. Not recommended for single-position holdings. All selected bonds are personal summaries, not investment advice. 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 phenomena are like illusions, like a dream, like bubbles, like lightning. Observe with such a mindset—without attachment—and cultivate your heart. Water droplets may be tiny, but they gradually fill a large vessel…