2026-3-27 Convertible Bond Portfolio Adjustment

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 my current convertible bond holdings are not high (overall position around 45%), which is near the lower limit of my holdings, I plan to hold steady to prepare for potential new highs. Last week, I slightly increased my position. Maintaining the position is indeed challenging…

Yesterday’s overall market performance:

The previous trading day, convertible bonds fell, A-shares fell, U.S. stocks fell, FTSE A50 fell. U.S. stocks declined moderately last night, and the Japanese and Korean markets that have already opened saw slight declines. After two days of rebound, A-shares dropped sharply yesterday. Expected to decline today, external factors remain significant. Observe whether convertible bonds can stay stable today. Recent strategy: overall unstable, less watching, less acting; avoid rapid adding or adjusting positions. If the position is very low, gradually reduce to below 50%…

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now it’s at 2578, with a median of 134.8, temperature 83.3 degrees. There are 226 convertible bonds above 130 yuan, 15 fewer than the previous day, accounting for 64.6%. 13 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 4. In March, 12 green and 7 red convertible bonds. Total trading volume was 61.3 billion, 13.5 billion less than the previous trading day, with a turnover rate of 12.3%, marking the first day below 600 billion. The convertible bond index dropped 42 points to 2578, with an average price of 152.2, down 2.6 from the previous day. The median premium is 35.3%, slightly lower than before. A-shares traded 1.8571 trillion yuan, 200 billion less than the previous day. Yesterday opened flat and declined sharply, ultimately falling significantly. Sentiment for convertible bonds remains moderate; some arbitrage trading is ongoing, maintaining positions.

Yesterday, Meno rose 14.2%, leading gains. Trading concentration increased, with the top 5 traded varieties accounting for 30.5% of total convertible bond trading, up from 19.4%. The highest single trade volume was 6.8 billion. Most varieties saw decreased activity, with the number of trades below 10 million dropping from 0 to 3. Market share of these low-volume trades is about 1%, with the minimum amount decreasing from 12.3 million to 8.27 million yuan.

Today’s convertible bond and market-related information:

Jiayuan last trading day; Lepu 2 last conversion day; Weining upcoming meeting for price adjustment; Changgao convertible bond listed on March 30; Huamao convertible bond: no mandatory redemption; Huitian convertible bond: no adjustment; Puan Medical: new stock listing on Beijing Stock Exchange; Hongban Technology, Sanrui Intelligent: new Shanghai Stock Exchange IPO subscriptions…

Zhongtian Fine Decoration: shareholders plan to reduce holdings by no more than 3%; Huiyun Titanium: shareholders plan to reduce holdings by no more than 3% in total; Lantian Gas: controlling shareholder’s loan dispute, 42.8 million shares frozen; Kangtai Medical: shareholder plans to inquire and transfer 3.74% of shares.

Today, Alar and Jinji may meet the possible mandatory redemption conditions a day earlier; today, Wu may meet the possible trigger for price reduction a day earlier.

No new bonds are listed today; 2 new stocks are available for subscription; no convertible bonds are available for subscription today. Focus today on whether Meno’s convertible bonds can stay stable.

Meno’s underlying stock has been very active recently, with continuous limit-ups and relatively low premium rates. Keep monitoring; Lida, Chaoda, and other trending stocks also warrant attention; consider adjusting positions in relatively low-priced stocks like Yaoyi, Kelun, Jingrui 2, and others as options for rebalancing…

Summary of information:
1: US-Iran negotiations are uncertain; the US proposed a 15-condition negotiation plan, Iran set preconditions;
2: Expected hot topics: computing power (Aofei, Zhongbei, Yitian, Xinfu); power grid equipment (Jin 05, Jingda, Huachen, Jazeera, Yubang); space photovoltaics (Shuangliang, Fu 22, Aowei, Dier, Reco, Tian 23, Long 22); AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoyi, Kelun, Sit, Pulian); commercial aerospace (Guanglian, Zhai 22, Huati, Shenyu, Mengsheng, Hangyu); chemical industry (Baichuan 2, Hongqiang, Jinjie, Heda, Qixiang 2); chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu); photoresist (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and related concepts…

Yesterday, convertible bonds opened lower and declined sharply, with trading volume significantly reduced. Today, it’s expected that weekend uncertainties will cause moderate declines. No signs of stability yet. Thematic speculation opportunities exist. Overall, prices and premiums are relatively high, with arbitrage opportunities.

Last weekend’s bond selection (personal notes, not investment advice): Due to high median levels, I relaxed some selection standards! Overall quality improved compared to last week, considering volatility capacity. Still optimistic about the market, planning to hold some convertible bonds, focusing on relatively low prices, small caps, and concept-rich active stocks for diversification, not for single-position recommendations (pure bonds are also not recommended).

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

Hengfeng, Wanshun, Shanshi, Kelun, Juhe, Silk Road, Yirui, Jiudian 2, Lida…

2: Slightly larger bonds under 150 yuan, under 200 million, with limited downward volatility, capable of premium, high upper limit, small retracement, excluding recent potential for strong redemption:
Ailu, Haibo…

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

Chaosheng, Wanshun 2, Wantian, Fengshan, Jinpu, Qiangli, Weitang, Lantian, Dier…

4: Relatively low-priced, around 150 yuan, with about 20% premium, within 500 million, ensuring profit/loss ratio:

Meno, Xingang, Ruifeng…

5: Pure aggressive bonds, premium around 15%, around 160 yuan, scale 400 million, excluding those potentially redeemed within 2 weeks:
None…

6: Pure defensive bonds, premium not very high, around 70%, with a size under 1 billion, yield around -3%, with diverse concepts:

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

7: Personally active and concept-rich bonds, with relatively low prices, good elasticity, usually around 140 yuan:

Lihe, Jingrui 2, Hongwei, Mingli, Changhai, Zhengyuan 2, Sanjiao, Huaxing, Yaoyi, Xingrui…

Recently, some convertible bonds have been adjusted, with some starting to meet redemption conditions in a few days, while others may not. Premiums have been reduced accordingly, such as Diao, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjie, Changhai, Alar, Saite…

Current market conditions show clear pressure from mandatory redemptions, limiting upside potential. Avoid overly expensive bonds.

Overall strategy: avoid deep research, avoid concentration, diversify broadly, ride the volatility, adopt a whack-a-mole approach, use wide coverage instead of deep focus, hedge risks, pursue average returns, and consider conditional orders and grid trading to utilize 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 bond investing. Currently, convertible bonds are very suitable for retail investors. Investing in convertibles 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 a dream, like bubbles, like lightning. Maintain the right perspective, be unattached, and let the mind be free. Water droplets are tiny but can gradually fill a large vessel…