March 6, 2026 - Convertible Bond Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the riskiest, as 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 stock becomes popular, its price can only move in one direction: up!

Since individual convertible bond holdings are not a large proportion (less than 45% of the overall portfolio), they are already at the lower limit of holdings. I do not plan to reduce positions proactively, but last week I was still forced to cut some, as maintaining the position is indeed challenging…

Yesterday’s overall market performance:

The previous trading day: Convertible bonds rose, A-shares rose, U.S. stocks fell, FTSE A50 declined, U.S. stocks started falling again, Japan and Korea markets opened lower. External factors continue to influence; will the rebound today last?

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2695, with a median of 140.1, a temperature of 90.8 degrees. There are 270 convertible bonds above 130 yuan, up 2 from the previous day, accounting for 74.3%. Below 110 yuan, there are 11, unchanged from the previous day, with prices ranging from a low of 0 to a high of 3. In March, 3 green and 1 red convertible bonds.

Total convertible bond trading volume was 73 billion, down 5 billion from the previous trading day, with a turnover rate of 14.5%, reaching 700 billion for the 7th day. The index rose 0.5 points to 2695, with an average price of 160.8, unchanged from the previous day. The median premium is 32.2%, down 0.2 from yesterday. A-shares traded 24,128 billion, up 200 million from the previous day.

Yesterday, the market opened high and then declined, with slight fluctuations, ending slightly higher overall. Sentiment remains high; some traders are maintaining positions.

Yesterday, Yongji rose 8.24%, leading gains. Convertible bond trading concentration decreased; the top 5 varieties accounted for 16.2% of total convertible bond trading volume, down from 20.4%. The highest single-trade volume was 2.5 billion. Most varieties saw decreased activity, with the number of trading volumes below 10 million rising from 1 to 3. The minimum trading amount dropped from 9.26 million to 6.38 million.

Today’s convertible bond and market info:

Hu’an, Zhonghe, Guanglian last trading day; Changgao convertible bonds: subscription on March 9…

Baichuan 2: The total guarantee balance between parent and subsidiary companies is 4.968 billion yuan, accounting for 250.79% of the latest audited net assets. East Time: Maturing on April 8, 2026, the company is expected to be unable to repay principal and interest on time; official default announced. Julong reduced holdings; Yinlun signed a $131 million contract; Jincheng signed a 166 million yuan contract…

Today, Diu Garden may meet the redemption condition with one more day; today, Wu may meet the condition to trigger a price adjustment with one more day.

No new bonds listed today, no new stock or convertible bond subscriptions. Focus today: Will East Time’s rebound stabilize? etc.

East Time has officially defaulted, the only CCC-rated bond in the market. Monitor whether this affects other varieties. Trends remain positive for Guangli, Huaxing, etc.; continue to watch. Also pay attention to relatively low-priced varieties like Garden, Aidi, Jingrui 2, Qiangli, etc.

Summary of information:
1: Two domestic conferences opening; Premier Li Qiang’s government work report projects economic growth of 4.5-5%, CPI at 2%, 14th Five-Year Plan;
2: Expected hot topics: future energy, green fuels, smart economy, and other Two Sessions concepts; power grid equipment (Jin 05, Jingda, Huachen, Jiazhe, Yubang), space photovoltaics (Shuangliang, Fu 22, Aowei, Dier, Reike, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian), commercial space (Guanglian, Zhan 22, Huatai, Shenyu, Mengsheng, Hangyu); chemical industry (Baichuan 2, Hongqiang, Jinjii, Heda, Qixiang 2), chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu), photoresist (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts…

Yesterday’s convertible bonds opened high and then declined slightly, with a slight increase overall; trading volume decreased. Today, slight decline expected. Sector hype opportunities exist. Overall prices and premiums are relatively high, with some traders engaging in T+T strategies.

Below are last weekend’s bond selections: (Personal selection records, 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 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 below 150 yuan, under 200 million, limited downward volatility, capable of driving premiums, high upper limits, minimal retracement, excluding recent potential for early redemption:
Ailu, Haibo…

3: Relatively low-priced, low-premium varieties, around 145 yuan, with about 30% premium, maturity 0.5-5.5 years, good for swing trading:

Tianhao, Jinpu, Wantian, Qiangli, Lantian, Wanshun, Mino, Yinwei, Lihes…

4: Low-price, aggressive team, around 150 yuan, ensuring certain profit/loss ratio, under 500 million, about 20% premium:

Hengfeng, Fengshan…

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

6: Defensive type, moderate premiums (~70%), not relying solely on price cuts, under 1 billion, yield around -3%, with diverse concepts:

Zhibang, Gongtong, Kesi, Baichang, Xineng, Zhejiang Construction…

7: Actively watched, concept-rich, not too expensive, with good flexibility, usually around 145 yuan:

Kelun, Shanshi, Lihes, Jingrui 2, Yirui, Jintian, Hongwei, Weitang, Chaosheng, Mino, Mingli, Bainiu…

8: Bond-type varieties, suitable for those unwilling to hold cash:
Shenhao, Fuhan, Jiete, Lige, Jiankang, Shou 22, Kangyi, Lizhi, Jinsan, Huoxing, Taishi 21, Yuxing…

Recently, some convertible bonds have been adjusted, with some meeting redemption conditions for several days, but may not meet them later. The premium rates have dropped significantly, such as Diu, Garden, Hongqiang, Huaxing, Weitang, Hangxin, Guangli, Sanjiao, Aidi, Jinjii, Changhai…

Current market conditions show strong redemption pressure, limiting upper bounds. It’s best to avoid overly expensive varieties.

Overall strategy: avoid deep research, focus on broad allocation, ride the volatility, adopt a whack-a-mole approach, use wide positions instead of deep, and hedge risks. Pursue average returns, possibly using conditional orders and grid trading to maximize 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 a dream, like dew or lightning. Observe with equanimity, do not dwell, and let your mind be free. Though water droplets are tiny, they can gradually fill a large vessel…