March 23, 2026 - Convertible Bonds 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 my current convertible bond holdings are not high (about 45% overall), which is the lower limit of my position, I am not planning to reduce holdings proactively to prepare for potential new highs later. I slightly increased my position last week, maintaining the portfolio is indeed challenging…

Yesterday’s overall market performance:

The previous trading day, convertible bonds fell, A-shares fell, US stocks fell, FTSE A50 fell. US stocks declined moderately on Friday, Japan and South Korea markets also declined moderately in the morning. External factors remain significant. We will observe whether convertible bonds can stabilize today. Do not increase or adjust positions too quickly. If the position is low, you can gradually reduce to below 50%.

The convertible bond index dropped from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2558, with a median of 134, temperature at 81.1 degrees. There are 223 bonds above 130 yuan, 15 fewer than the previous day, accounting for 62.8%. There are 11 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 2. In March, 10 green and 5 red convertible bonds traded. Total trading volume was 68.7 billion, up 7.9 billion from the previous trading day, with a turnover rate of 13.6%, reaching 600 billion for the fourth day. The convertible bond index fell 26 points to 2558, with an average price of 150.9, down 1.4 from the previous day. The median premium is 32.2%, up 2.1. A-shares traded 23,031 billion, 1,800 billion more than the previous day.

Yesterday, the market opened high, then declined sharply, then rebounded, then declined again in an M-shape. In the afternoon, it moved southeast and finally fell significantly, indicating a cooling of sentiment in convertible bonds. Some traders are doing T+ trades to maintain positions.

Yesterday, Haiyou rose 8.7%, leading gains. Trading concentration in convertible bonds decreased; the top 5 traded varieties accounted for 16.7% of total convertible bond trading volume, down from 18.8%. The highest single trade volume was 3.3 billion. Most varieties saw decreased activity, with the number of trades below 10 million remaining at 3. The market share of these is 0.8%, with the lowest amount from 7.29 million to 4.61 million yuan.

Today’s convertible bond and market updates:

Anji: Last trading day; Mengsheng: Last conversion day; Shuiyang convertible bond: No forced redemption; Jin 23 convertible bond, Fulaile convertible bond, Guanyu convertible bond: No downward revision.
Lepu: Final trading day before maturity: March 24, 2026; Longyuan: New stock subscription on Beijing Stock Exchange.

ST Dongshi: The company and responsible persons received prior administrative penalty notices for inflated profits in 2022 financial reports.
Shuangliang: The company and controlling shareholders received prior penalty notices, each fined 4 million yuan.
Huahai: Planning to transfer 67% of its subsidiary for 287 million yuan.

Today, Ala is expected to meet the possible forced redemption with a one-day delay; Zhengfan and Shuangle are also close to triggering downward revisions, possibly with a one-day delay.

Today, 0 new bonds are listed, 1 new stock subscription, 0 convertible bond subscriptions. Focus today on whether convertible bonds can stabilize, etc.

Meno: Weight loss drug concept, the stock hit the daily limit; Tefu, Mingli, and others show good trends, continue to monitor; also watch Huaxing, Yaoji, Haibo, Weitang, and other relatively low-priced varieties…

Summary of information:

1. The Middle East geopolitical conflict continues to escalate, leading to a new round of domestic refined oil price increases, about 1.6 yuan per liter.
2. Expected hot topics: Computing power (Aofei, Zhongbei, Yitian, Xinfu); Power grid equipment (Jin05, Jingda, Huachen, Jiazhe, Yubang); Space photovoltaics (Shuangliang, Fulaile, Ao Wei, Dier, Ruike, Tian23, Long22); AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian); Commercial aerospace (Guanglian, Zhen22, Huatian, Shenyu, Mengsheng, Hangyu); Chemical industry (Baichuan2, Hongqiang, Jinjii, Heda, Qixiang2); Chips (Liyang, Maolai, Luwi, Huicheng, Jingrui2, Anji, Yanggu); Photolithography (Jingrui2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and related concepts.

Yesterday, convertible bonds opened high and then declined sharply, with increased trading volume. Market sentiment is low; today is expected to see moderate decline. Whether convertible bonds can stabilize remains a key focus. Sector hype opportunities exist. Overall prices and premiums are relatively high, with some traders doing T+ trades.

Below are last weekend’s bond selections (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. Of course, I 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 (no pure debt products recommended).

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

Hengfeng, Wanshun, Shanshi, Kelun, Juhua, Silu, Yirui, Jiudian2, Lida…

2. Slightly below 150 yuan, under 200 million, limited downward volatility, capable of premium driving, high upper limit, minimal retracement, excluding recent potential forced redemptions:

Ailu, Haibo…

3. Relatively low-priced, low-premium bonds, around 140 yuan, with about 30% premium, maturity between 0.5-5.5 years, suitable for swing traders:

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

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

Meno, Xingang, Ruifeng…

5. Pure aggressive types, around 160 yuan, with about 15% premium, scale around 400 million, excluding those potentially forced redemptions within two weeks:

None…

6. Pure defensive types, with moderate premiums around 70%, under 1 billion, yield around -3%, with diverse concepts:

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

7. Personally focused on more active, concept-rich, reasonably priced varieties, usually around 140 yuan:

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

Recently, some convertible bonds have been adjusted, with some meeting forced redemption conditions in recent days, while others may not. The premium rates have dropped significantly, such as DIO, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Changhai, Ala, Saite, etc.

Current market conditions show clear pressure from forced redemptions, limiting upper bounds. It’s best to avoid overly expensive varieties.

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride volatility, adopt a whack-a-mole approach, use width instead of depth, hedge risks, pursue average returns, and consider conditional orders and grid trading to utilize volatility. No single-position recommendations. 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 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 a bubble, like a flash of lightning. One should observe with such a mindset, without attachment, and cultivate the heart. Water droplets are tiny but can gradually fill a large vessel…

Some friends ask how to operate Haiyou convertible bonds. Given the current situation, this stock has a small market cap, with multiple record highs in the past. Whether it will have another chance to surge is uncertain. The only option is to endure, and be mentally prepared that not all varieties will make money.