2026-3-11 Convertible Bond Portfolio Rebalancing

Investing is a popularity contest. Buying at the peak of popularity is the most dangerous, 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. Over 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 (about 45% overall), this is already the lower limit of my position. I do not plan to reduce holdings actively. I slightly increased my position last week, maintaining the position is indeed not easy…

Yesterday’s overall market performance:

The previous trading day: Convertible bonds rose, A-shares rose, US stocks closed, FTSE A50 declined. US stocks consolidated last night, Japan and South Korea opened slightly higher. External factors remain significant; we will observe whether the market can stabilize today…

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024, then rose to 2727. The current median is 141.8, with a temperature of 92.9 degrees. There are 279 convertible bonds above 130 yuan, more than the previous day, accounting for 77.5%. There are 11 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 5. In March, there were 4 green and 3 red bonds. Convertible bond trading volume was 65.7 billion, down 11.4 billion from the previous trading day, with a turnover rate of 13.1%, the first day below 600 billion. The convertible bond index increased by 32 points to 2727, with an average price of 163.3, up 2.5 from the previous day. The median premium is 31.8%, up 0.4. A-shares traded 24,170 billion, down 2,600 billion from the previous day. Yesterday opened high, moved moderately, and ultimately surged significantly. Sentiment temperature remains high; some traders are doing T+T, maintaining positions.

Yesterday, Lianrui rose 13%, leading the gains. Trading concentration in convertible bonds decreased; the top 5 traded varieties accounted for 14% to 15% of total convertible bond trading, with the highest single trading volume at 2.5 billion. Most varieties saw decreased activity, with the number of varieties trading below 10 million decreasing from 2 to 4, representing about 0.7% of the market, with the lowest amount from 7.16 million to 7.98 million yuan.

Today’s convertible bond and market-related information:

Lianchuang, Xinfu, last trading day; Zhonghe, Hu’an, last conversion day; Baichuan 2: forced redemption; Hebang: no forced redemption; Xin Hengtai: new stock on Beijing Stock Exchange [subscription]; Haitian convertible bond: listed on March 12.

Tongwei Co.: Planning to acquire 100% equity of Lihao Qingneng, stock will resume trading; Southeast Network Rack: planning to buy back 100-200 million yuan of company shares.
Microchip Biological: planning to buy back 80-120 million yuan of company shares; Tianyuan: subsidiary investing 560 million yuan in energy storage project; Hongqiang: some products’ prices increased by 50%-80%; Jiudian reduced holdings; Shangsheng: stop converting from March 13; indicating recent issuance of convertible bonds…

Today, Huayuan, Hongqiang, Yubang, Titan are expected to meet the potential forced redemption criteria in about a day; Wanning is also close to meeting the criteria, possibly triggering a price adjustment.

Today, 0 new bonds listed, 1 new stock subscription, 0 convertible bond subscriptions. Focus today: whether the rebound of convertible bonds can continue, etc.

Taifu, Shuangliang, Yubang, and others show good trends; continue to monitor. Also pay attention to relatively low-priced varieties like Jingrui 2, Weitang, Zhengyuan 2, etc.

Information summary:
1: President Trump states the Iran war is basically over, but when the Iran conflict will end remains unclear;
2: China’s February foreign trade returned to double-digit growth, with exports to the US down 16.9%;
3: Expected hot topics: crayfish farming concept (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, Yaoji, Kelun, Sit, Pulian); commercial aerospace (Guanglian, Zai 22, Huati, Shenyu, Mengsheng, Hangyu); chemical industry (Baichuan 2, Hongqiang, Jinjii, Heda, Qixiang 2); chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu); lithography (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts…

Yesterday, convertible bonds opened high and moved sharply higher, with increased trading volume; today is expected to see slight gains. The overall prices and premium rates of convertible bonds are relatively high, with some traders doing T+T.

Below are last weekend’s bond selections: (personal bond selection record, 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, the premise is still optimistic about the market outlook, and I plan to hold some convertible bonds, choosing relatively low prices and small caps, focusing on concept-rich and active varieties, mainly for diversification, not for single-position recommendations:

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

2: Slightly below 150 yuan, under 200 million, with limited downward volatility, capable of driving premiums, with high upper limits, small retracements, excluding recent potential forced redemptions:
Ailv, Haibo…

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

Wantian, Qiangli, Lantian, Wanshun 2, Yinwei, Hengfeng, Yirui, Manno, Shanshi, Shangsheng…

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

Tianhuo, Weitang, Zhonglu, Fengshan…

5: Pure offensive types, with about 15% premium, around 160 yuan, scale around 400 million, excluding those with potential forced redemption in 2 weeks:
None…

6: Pure defensive types, with moderate premiums around 70%, not relying heavily on price adjustments, under 1 billion, with yields around -3%, with diverse concepts:

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

7: Personally more active and concept-rich varieties, with relatively low prices, good elasticity, usually around 145 yuan…

Kelun, Lihes, Jingrui 2, Jintian, Hongwei, Mingli, Bainian, Changhai, Zhengyuan 2…

8: Bond-type varieties, suitable for those unwilling to hold cash…
Shenhao, Fuhan, Jiete, Ligao, Jiankang, Shou 22, Kangyi, Lizhi, Jinxing 23, Mars, Tai 21, Yuxing, Xinhai…

Recently, some convertible bonds have been adjusted, with some beginning to meet forced redemption conditions for several days, while others may not meet the criteria anymore. The premium rates have been reduced accordingly, such as DIO, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Changhai…

Current market conditions show significant pressure from forced redemptions, limiting upper bounds. Therefore, I avoid overly expensive varieties…

The overall strategy is not to research deeply, not to concentrate, to diversify widely, to ride volatility, and to adopt a whack-a-mole approach. Use width instead of depth, focus on risk defense, pursue average returns, and consider using conditional orders and grid trading to maximize volatility utilization. Not recommended for single holdings. All bond 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; it’s essential to stick to the right path, 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 accordingly, without attachment, and cultivate the mind. Although water droplets are tiny, they gradually fill a large vessel…