2026-2-9 Convertible Bond Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the most dangerous. 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. With time, once the asset becomes popular, its price can only move in one direction: up!

Since individual convertible bond positions are not high (less than 45% of the total portfolio), I plan to start gradually adjusting the holdings. This week is the last trading week before the Spring Festival. I plan to appropriately buy back in the first half of the week to prepare for the New Year’s red envelope market. Students with higher positions can slowly sell, as the probability of a large drop is small…

Yesterday’s overall market performance:

Previous trading day: Convertible bonds rose, A-shares fell, US stocks rose, FTSE A50 rose…

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now it’s at 2739, with a median of 141, a temperature of 95.1 degrees, 284 bonds above 130 yuan (5 more than the previous day), accounting for 76.1%; 8 bonds below 110 yuan (1 less than the previous day), with prices ranging from a low of 0 to a high of 10; in February, 3 green and 2 red convertible bonds. The trading volume of convertible bonds was 88.7 billion, up 15 billion from the previous trading day, with a turnover rate of 16.8%, reaching 800 billion on the first day. The convertible bond index increased by 26 points to 2739, with an average price of 163.7, up 1.8 from the previous day, median premium of 35.2%, up 2 points; A-shares traded 21,636 billion, down 300 billion from the previous day. Yesterday, the market opened low and rose, pulling back slightly at the end, ultimately closing significantly higher. Sentiment for convertible bonds remains high; some traders are doing T+0 trading to maintain positions.

Yesterday, Tairey led with a 10.6% increase; trading concentration increased, with the top 5 bonds accounting for 26% of total convertible bond trading volume, with the highest single trade at 8 billion. Most bonds saw increased activity; the number of bonds with trading volume below 10 million decreased from 3 to 1; representing 0.3% of the market, with the lowest amount from 4.61 million to 5.99 million.

Today’s convertible bond and market-related information:

Beigang Shentong’s last trading day, Hongchuan’s price cut to the bottom, Feng 21, Mengsheng, Rong 23, forced redemption; Daimai not subject to forced redemption, Jianlong not cut, Tongbao Optoelectronics: new stock subscription on the Beijing Stock Exchange.

Kangtai Biological: terminated joint venture with AstraZeneca to establish a vaccine company; Hangyu plans to invest 83.62 billion to build a production base in Slovakia…

Conversion information: Xingfa converted 288 million; Shuangliang Jingneng converted 113 million; Zhenhua converted 140 million; Beigang converted 68 million; Huazheng converted 30 million; Shentong converted 46 million.

Today, Linuo, Yaoji, Xinfu, Zhonghe, Jiemi, Weixin, and Microchip are expected to meet the forced redemption threshold within one day; among them, Zhonghe and Linuo have a higher probability of forced redemption; today, no new bonds are listed, one new stock subscription, zero convertible bond subscriptions. Focus today on: Baichuan 2, whether multiple convertible bonds will be forced redeemed, etc.

Baichuan 2’s underlying stock has been very active recently; observe; Jiemi is expected to meet forced redemption today, with abnormal premium increases in convertible bonds; Mingli, Dier, Huaxing, and others show good trends, continue to monitor; also watch for Weitang and Qiangli, which may not meet forced redemption conditions soon.

Summary of information: 1: US stocks surged last night, Japan and Korea markets both rose about 4% in early trading… 2: Expected hot topics: Power grid equipment (Jin 05, Jingda, Huachen, Jiazhe, Yubang), Space photovoltaics (Shuangliang, Fu 22, Aowei, Dier, Ruike, Tian 23, Yubang, Long 22), AI applications (Xinzhi, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian), Brain-Computer Interface (Saili, Jiahe, Shengxun, Lepu 2, Baolai, Wind Language), Commercial Aerospace (Guanglian, Zai 22, Huati, Shenyu, Mengsheng, Hangyu); AI edge devices (Fuxin, Chao Sheng, Jiahe, Chun 23), Chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu); Photolithography (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts…

Yesterday, convertible bonds opened high and moved steadily, with moderate fluctuations, trading volume increased; Today’s forecast: moderate rise; thematic speculation has opportunities; overall prices and premiums of convertible bonds are very high, with some traders doing T+0 trading.

Below are last weekend’s bond selections: (personal selection records, not investment advice). Due to high median values, I relaxed the selection criteria! Overall quality improved compared to last week, considering volatility capacity. Of course, the premise is still optimistic about the market, and I plan to hold some convertible bonds, choosing relatively low prices and small caps, focusing on concept-rich and active bonds, mainly for broad allocation, not for single-position recommendations:

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

2: Slightly below 150 yuan, within 200 million, limited downward volatility, can drive premiums, with high upper limits, less retracement, excluding bonds likely to be forcibly redeemed recently: Ailu, Haibo…

3: Relatively low-priced, low-premium bonds, around 145 yuan, with about 30% premium, with 0.5-5.5 years remaining, suitable for swing trading: Hongbai, Wantian, Jinpu, Qiangli, Wanshun 2, Chao Sheng, Yong 22, Xingqiu, Shuyu, Changhai, Yirui, Shanshi…

4: Relatively low-priced, aggressive bonds, around 150 yuan, with guaranteed profit/loss ratio, within 500 million, about 20% premium: Hengfeng, Fengshan…

5: Pure offensive bonds, premium rate about 15%, around 160 yuan, scale 400 million, excluding those likely to be forcibly redeemed within 2 weeks: None…

6: Pure defensive bonds, premium rate not very high, around 70%, not entirely relying on price cuts, within 1 billion, yield around -2%, with diverse concepts: Zhibang, Gongsong, Kesi, Baichang, Xineng, Qiaoyin…

7: Personally more active and concept-rich bonds, not too expensive, with good elasticity, usually around 145 yuan: Kelun, Shanshi, Lihé, Hangxin, Haibo, Jintian, Hongwei, Lantian, Weitang…

8: Bond-type bonds, suitable for those unwilling to hold cash: Shenhao, Fuhan, Bain, Xiangjia, Kangyi, Lizhi, Yuxing, Zhejian…

Currently, forced redemption pressure is quite evident, limiting the upper bounds, so I avoid overly expensive bonds…

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride the volatility, play whack-a-mole, use width instead of depth, hedge risks, pursue average returns, and use conditional orders and grid orders to maximize volatility utilization. Not recommended for single-position holdings. All selected bonds are personal summaries, not investment recommendations. Investing involves risks; enter cautiously.

Stay true to the original purpose of convertible bonds. Currently, convertible bonds are very good for retail investors. Convertible bond investing is a marathon; it’s essential to 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 dew or lightning. One should observe with such a mindset, without attachment, and cultivate the mind. Though water drops are tiny, they gradually fill a large vessel…