2026-3-5 Convertible Bond Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the most dangerous because 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 them. Over time, once a product gains popularity, its price can only move in one direction: up!

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

Market performance yesterday:

The previous trading day: Convertible bonds fell, A-shares fell, US stocks rose, FTSE A50 rose. US stocks increased, and markets in Japan and South Korea opened higher. External factors continue to influence; whether the rebound today can sustain remains to be seen…

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, a temperature of 90.9 degrees. There are 268 convertible bonds above 130 yuan, 7 fewer than the previous day, accounting for 73.6%. Below 110 yuan, there are 11, unchanged from the previous day, with prices ranging from a low of 0 to a high of 4. March saw 3 green and 0 red convertible bonds. Total trading volume was 78 billion yuan, up 1.2 billion from the previous day, with a turnover rate of 15.5%, reaching 700 billion yuan for the sixth consecutive day. The convertible bond 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 pulled back with slight fluctuations, ending with a slight decline. Sentiment remains high; some traders are doing T+ trades to maintain positions.

Yesterday, Hongbo led with a 5.63% increase. Trading concentration increased, with the top 5 traded varieties accounting for 20.4% of total convertible bond trading, with the highest single trade volume at 4 billion yuan. Most varieties saw decreased activity, with the number of trading varieties below 10 million dropping from 1 to 1; representing 0.3% of the market, with the minimum amount 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 the end of March; Haohan signed an equity agreement with Yiwei Aviation…

Today, Diu Garden is expected to meet the redemption trigger a day earlier; today, Wu is expected to meet the trigger a day earlier, possibly triggering a downward adjustment.

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

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

Summary of information:

1. The China National Congress will open today, with Premier Li Qiang delivering 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, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian), Commercial aerospace (Guanglian, Zhan 22, Huati, Shenyu, Mengsheng, Hangyu), Chemical industry (Baichuan 2, Hongqiang, Jinjia, Heda, Qixiang 2), Chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu), Photoresist (Jingrui 2, Huate, Huamao, Qiangli), plus ongoing attention to humanoid robots and other concepts…

Yesterday, convertible bonds opened high and 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+ 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, small caps, and concept-rich active varieties—mainly for broad allocation, not single-position recommendations:

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

2. Slightly larger micro-cap bonds under 150 yuan (around 200 million), with limited downward volatility, high potential for premium, low retracement, excluding recent strong redemption risks: Ailu, Haibo…

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

4. Low-priced, aggressive bonds around 150 yuan, with about 20% premium, under 500 million, ensuring certain profit/loss 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%, under 1 billion, with yields around -3%, rich in various concepts: Zhibang, Gongtong, Kesi, Baichang, Xineng, Zhejiang Construction…

7. Active personal favorites, concept-rich, not too expensive, with good elasticity, usually around 145 yuan: Kelun, Shanshi, Lihes, Jingrui 2, Yirui, Jintian, Hongwei, Weitang, Chaosheng, Mino, Mingli, Bainiu…

8. Bond-type varieties for those unwilling to hold cash: Shenhao, Fuhan, Jiete, Lige, Jiankang, Shou 22, Kanyi, Lizhi, Mars, Tai 21, Yuxing…

Recent adjustments in convertible bonds include some meeting redemption conditions for several days, but some may not, with premiums already reduced, such as Diu, Garden, Hongqiang, Huaxing, Weitang, Hangxin, Guangli, Sanjiao, Aidi, Jinjia, Changhai…

Current market conditions show strong redemption pressure, limiting upside, so avoid overly expensive varieties…

Overall strategy: avoid deep research, focus on broad allocation, ride the volatility, adopt a whack-a-mole approach, use wide coverage instead of depth, hedge risks, pursue average returns, and consider conditional orders and grid trading to leverage volatility. Do not recommend specific holdings; all selections 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 actions are like illusions, like dreams, bubbles, or lightning. Observe with equanimity, do not dwell, and cultivate the right mindset. Water droplets may be tiny, but they gradually fill a large vessel…