2026-2-10 Convertible Bond Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the most dangerous. At that time, all positive factors and viewpoints 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 my personal convertible bond holdings are not a large proportion (less than 45% of the overall portfolio), I plan to start gradually adjusting my positions. This week is the last trading week before the Spring Festival. I plan to appropriately replenish in the first half of the week, preparing for the New Year’s red envelope market. Those with higher positions can slowly sell. The probability of a big drop recently is small. Unfortunately, there was a big surge yesterday, and I hope there will still be a chance to adjust positions today…

Market performance yesterday:

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

The convertible bond index dropped from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2779, with a median of 142.2, a temperature of 96.2 degrees. There are 292 bonds above 130 yuan, 8 more than the previous day, accounting for 78.3%; 8 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 21. In February, there were 3 green and 3 red convertible bonds. Total convertible bond trading volume was 85.7 billion, 3 billion less than the previous trading day, with a turnover rate of 16.3%, reaching 80 billion on the second day. The convertible bond index increased by 40 points to 2779, with an average price of 166.5, up 2.8 from the previous day. The median premium was 34.4%, down 0.8 from the previous day. A-shares traded 22,704 billion, 1,100 billion less than the previous day. Yesterday opened high and moved higher, trending northeast, ultimately surging significantly. Sentiment in the convertible bond market remains high; some traders are doing T+T, maintaining positions.

Yesterday, Baichuan 2 led with a 20% increase; trading concentration in convertible bonds decreased, with the top 5 traded varieties accounting for 25.3% of total convertible bond trading volume, down from 26%. The highest single trading volume was 7.7 billion. Most varieties saw increased activity, with the number of varieties trading below 10 million decreasing from 1 to 1; their market share is 0.3%, with the minimum amount from 5.99 million to 8.04 million.

Market-related information today:

Hua Zheng last trading day, Fulian last conversion day, Zhonghe forced redemption, Yaoji Jiemei, not forced redemption, Aidetech: new stock listing on Beijing Stock Exchange.

Hailianxun completed absorption and merger with Hangzhou Gas Turbine, adding 2.11 billion shares listed. Hongtu convertible bond: rating downgraded.

Guangtai plans to invest 29.2 million yuan to acquire a 35% stake in Shandong Antai Airport…

Conversion information: Xingfa converted 1.16 billion; Jingneng converted 590 million; Shuangliang Rong 23 converted 1.66 billion; Feng 21 converted 1.42 billion; Shouhua converted 93 million; Guanglian Hengyi converted 21 million; DIO converted 10 million.

Today, Linuo, Xinfu, Weixin, Jinxin, Jingyuan are expected to meet the possible forced redemption with a one-day delay; among them, Linuo has a higher probability of forced redemption; today, Jiangshan may meet the trigger for a downward adjustment with a one-day delay.

No new bonds listed today, no new stock subscriptions, no convertible bond subscriptions. Focus today on: whether Baichuan 2 and multiple other convertible bonds will be forced redeemed, etc.

Baichuan 2’s underlying stock has been very active recently; observe; Jiemei not forced redemption; Fengyu, Guangli, Zhengguang, and other stocks hit the daily limit, and their convertible bonds surged yesterday. Continue to monitor; Huaya, Dier, Stet, and other trends are good, keep paying attention; Wingtang, Qiangli, and other recent bonds that may not meet the conditions for forced redemption…

Summary of information: 1: Shanghai, Shenzhen, and Beijing exchanges optimize refinancing, releasing three major signals… 2: Expected hot topics: Power grid equipment (Jin 05, Jingda, Huachen, Jiazhe, Yubang), Space photovoltaic (Shuangliang, Fu 22, Aowei, Dier, Ruike, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulan), Commercial aerospace (Guanglian, Zai 22, Huati, Shenyu, Mengsheng, Hangyu); Chemical industry (Baichuan 2, Hongqiang, Jinjia, Heda, Hengyi, Qixiang 2), Chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu); Photoresists (Jingrui 2, Huate, Huamao, Qiangli); plus humanoid robots and other concepts to keep an eye on…

Yesterday, convertible bonds opened high and moved higher, with significant fluctuations, and trading volume decreased; today is expected to see moderate gains; thematic speculation has opportunities; overall prices and premium rates of convertible bonds are quite high, with some traders doing T+T.

Below are bond selections from last weekend: (personal bond selection record, not investment advice). Due to high median levels, I relaxed the selection standards! Overall quality improved compared to last week, considering volatility capacity. Of course, the premise is still optimistic about the market outlook, and I plan to hold some convertible bonds, selecting relatively low-priced, small-cap stocks, focusing on concept-rich and active varieties, 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, capable of driving premiums, with high upper limits, less retracement, excluding bonds likely to be forcibly redeemed recently: Ailu, Haibo…

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

4: Relatively low-priced, aggressive stocks around 150 yuan, ensuring a certain risk-reward ratio, within 500 million, with about 20% premium: Hengfeng, Fengshan…

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

6: Pure defensive stocks, with a premium rate not too high, around 70%, not entirely relying on downward adjustments, market cap within 1 billion, yield around -2%, with diverse concepts: Zibang, Gongtong, Kesi, Baichang, Xineng, Qiaoyin…

7: Personally more active stocks, with rich concepts, not too expensive, with good elasticity, usually around 145 yuan: Kelun, Shanshi, Lihé, Hangxin, Haibo, Jintian, Hongwei, Qiangli, Lantian, Weitang…

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

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

The overall strategy is not to delve deeply, not to concentrate, to spread out, to ride the waves, to play whack-a-mole, using width instead of depth, while defending against risks and pursuing average returns. Conditional orders and grid orders can be used to maximize volatility utilization. No single-position recommendation. 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 good for retail investors. Convertible bond investing is a marathon. Be persistent in the right way, 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. One should observe with such a mindset, without attachment, and cultivate the mind. Though water droplets are tiny, they gradually fill a large vessel…