March 25, 2026 - 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. Given time, once a product becomes popular, its price can only move in one direction: up!

Since my current convertible bond holdings are not high (about 45% overall), which is already the lower limit, I am not planning to reduce positions proactively to prepare for potential new highs. I slightly increased holdings last week. Maintaining the position is indeed challenging…

Yesterday’s market overall performance:

The previous trading day, convertible bonds rose, A-shares rose, U.S. stocks fell, FTSE A50 rose, U.S. stocks slightly declined last night, Japan and South Korea’s markets opened slightly higher. Whether the A-shares rebound today can continue depends heavily on external factors. Watch whether convertible bonds can sustain the rebound today. Do not increase or adjust positions too quickly. If your holdings are low, you can gradually reduce to below 50%.

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now it is at 2590, with a median of 135.2, temperature at 84 degrees. There are 234 convertible bonds above 130 yuan, 31 more than the previous day, accounting for 66.1%. There are 13 below 110 yuan, 2 fewer than the previous day, with prices ranging from a low of 0 to a high of 3. March saw 11 green and 6 red convertible bonds.

Total convertible bond trading volume was 76.2 billion, up 3.8 billion from the previous trading day, with a turnover rate of 15.1%. It reached 700 billion on the second day. The convertible bond index rose 69 points to 2590, with an average price of 152.7, up 4.3 from the previous day. The median premium is 36.1%, up 0.7. A-shares traded 20,962 billion yuan, 3,500 billion less than the previous day.

Yesterday, the market opened high, then declined, and then surged again, forming an “N” shape. In the afternoon, it moved northeast and finally rose sharply, with sentiment warming. Some traders are doing T+0 trading, maintaining positions.

Yesterday, Haoyuan rose 10.3%, leading gains. Convertible bond trading concentration increased, with the top 5 traded varieties accounting for 14.2% to 15.5% of total convertible bond trading, with the highest single trade volume at 3.4 billion. Most varieties became more active, with the number of trades below 10 million decreasing from 0 to 0.

Today’s convertible bonds and market news:

Huatai, Fenggong, Liyang last trading day; Morning Light Motor: new stock subscription on the Beijing Stock Exchange; Changgao convertible bond: listed on March 30…

Haitian Shares: The strategic cooperation agreement with Tongwei Solar is an intent agreement and not binding; Jinchengxin signed a 470 million yuan engineering contract.

Today, Alar may meet the redemption condition with one day to spare; today, Wu may trigger a downward revision with one day to spare.

No new bonds listed today, one new stock subscription, no convertible bond subscriptions. Focus today: Mino, whether the convertible bonds can stabilize, etc.

Mino’s underlying stock has been very active recently, with a relatively low premium rate, continuing to monitor; Huaya, Zhongbei, and other trends are good, continue to watch; also monitor relatively low-priced varieties like Yaoji, Haibo, Kelan, etc.

Summary of information:

1. The U.S. proposed a negotiation plan with Iran containing 15 conditions.
2. Expected hot topics: computing power (Aofei, Zhongbei, Yitian, Xinfu); power grid equipment (Jin05, Jingda, Huachen, Jazeera, Yubang); space photovoltaics (Shuangliang, Fu22, Aowei, Dier, Reike, Tian23, Long22); AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelan, Sitite, Pulian); commercial aerospace (Guanglian, Zai22, Huatai, Shenyu, Mengsheng, Hangyu); chemicals (Baichuan2, Hongqiang, Jinjii, Heda, Qixiang2); chips (Liyang, Maolai, Luwi, Huicheng, Jingrui2, Anji, Yanggu); lithography (Jingrui2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts.

Yesterday, convertible bonds opened high, rose sharply, and trading volume increased. Popularity rebounded. Today is expected to see slight gains. Whether the bonds can stabilize is key. The theme of speculation has opportunities. Overall prices and premiums are relatively high, with T+0 trading.

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

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

Hengfeng, Wansun, Shanshi, Kelan, Juhe, Silk Road, Yirui, Jiudian2, Lida…

2. Slightly larger micro-cap bonds under 150 yuan, around 200 million, with limited downward volatility, capable of premium driving, high upper limits, small retracements, excluding recent potential for forced redemption:
   Ailu, Haibo…

3. Relatively low-priced, low-premium bonds around 140 yuan, with about 30% premium, 0.5-5.5 years duration, good for swing trading:

Chaosheng, Wanshun2, Wantian, Fengshan, Jinpu, Qiangli, Weitang, Lantian, Dier…

4. Low-priced, aggressive bonds around 150 yuan, with about 20% premium, under 500 million scale, ensuring certain profit/loss ratio:

Meinuo, Xingang, Ruifeng…

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

6. Defensive bonds, with moderate premiums around 70%, not relying heavily on downward revisions, under 1 billion scale, yield around -3%, with diverse concepts:

Gongtong, Kesi, Zhejiang Construction, Haishun, Haineng, Huitian, Yuxing, Dongya, Zite, Dongbao…

7. Personally active and concept-rich varieties, not too expensive, with good flexibility, usually around 140 yuan:

Lihe, Jingrui2, Hongwei, Mingli, Changhai, Zhengyuan2, Sanjiao, Huaxing, Yaoji, Xingrui…

Recently, some convertible bonds have been adjusted, with some meeting redemption conditions in a few days, while others may not. The premium rates have been cut down, such as Diou, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Changhai, Alar, Saite…

Current market conditions show clear downward pressure on redemptions, limiting upper bounds. Avoid overly expensive varieties.

Overall strategy: avoid deep research, focus on 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 single holdings. All selected bonds are personal summaries, not investment advice. Investing involves risks; enter cautiously.

Stay true to the original purpose of convertible bond investing. Currently, convertibles are very good for retail investors. Convertible bond investing is a marathon. Persist on the right path, stay away from hype. This is the truth and the cause-and-effect. All actions are like illusions, like a dream, bubble, or lightning. Observe with equanimity, do not dwell, and maintain a calm mind. Water droplets are tiny but can gradually fill a large vessel…

Deeply mourning Teacher Zhang Xuesong. Fate is unpredictable, and so is life and investing. We need to keep our original intentions, prioritize stability, stay patient, and make good use of time…