March 10, 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 total portfolio), which is already the lower limit of holdings, I do not plan to reduce positions proactively. Last week, I slightly increased holdings; maintaining the position is indeed challenging…

Yesterday’s overall market performance:

The previous trading day: Convertible bonds fell, A-shares fell, U.S. stocks rose, FTSE A50 rose. U.S. stocks rebounded last night, and Japan and Korea markets opened significantly higher. External factors remain influential; observe whether the market can stabilize today…

The convertible bond index dropped from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2694, with a median of 140.4, a temperature of 90.8 degrees. There are 276 convertible bonds above 130 yuan, more than the previous day, accounting for 76.5%. Eleven bonds below 110 yuan, unchanged from the previous day, with prices at a low of 0 and a high of 3; in March, 4 green and 2 red convertible bonds. Total trading volume of convertible bonds reached 77.1 billion, up 10 billion from the previous trading day, with a turnover rate of 15.4%, reaching 700 billion on the first day. The convertible bond index fell 11 points to 2694, with an average price of 160.8, down 0.4 from the previous day. The median premium is 31.4%, slightly lower than the previous day. A-shares traded 26,709 billion, an increase of 4,600 billion from the previous day. Yesterday, the market opened low, declined further, then rebounded with significant volatility, ultimately slightly down. Sentiment in the convertible bond market remains high; some traders are doing T+0 trading to maintain positions.

Yesterday, Rong 23 rose 12.95%, leading gains. Trading concentration in convertible bonds decreased; the top 5 traded varieties accounted for 16.3% to 114% of total convertible bond trading, with the highest single trading volume at 2.5 billion. Most varieties saw increased activity; the number of varieties with trading volume below 10 million decreased from 7 to 2, representing 0.7% of the market, with the lowest amount at 7.02 million and the highest at 7.16 million.

Today’s convertible bond and market-related information:

Feng 21 final conversion date; Fenggong convertible bond, Liyang convertible bond: forced redemption; Lianchuang convertible bond: last trading day before maturity: March 11, 2026.
Weier convertible bond: last trading day before maturity: April 7, 2026; Kehua convertible bond: no downgrade; Haitian convertible bond: listed on March 12…

Zhuhai Guanyu: planning to raise no more than 3.3 billion yuan through additional issuance; Zhejiang Construction: won a 3.6 billion HKD project; Zhongbei: possibly a 429 million computing power contract; Shangsheng: stop converting from March 13; indicating recent issuance of convertible bonds…

Today, Huayuan, Hongqiang, Hebang, Baichuan 2 are likely to meet forced redemption within one day; today, Wu is likely to meet a potential downgrade within one day.

No new bonds or stocks listed today; no new convertible bond subscriptions. Focus today on: whether Zhongbei’s convertible bond rebound can stabilize, etc.
Zhongbei is a concept related to computing power; both the stock and convertible bond surged yesterday, and after-hours announced a computing power contract—attention; Tairui, Shuangliang, and other trends are positive; continue monitoring; also watch Jingrui 2, Lihui, Qiangli, Zhengyuan 2, Hangxin, and other relatively low-priced varieties…

Summary of information:
1: President Trump stated that the Iran war is basically over; oil prices fluctuated sharply yesterday, up 40%.
2: China’s February CPI rose 1.3% year-on-year, the highest in nearly three years.
3: The “lobster farming” concept related to AI exploded in popularity…
4: Expected hot topics: Lobster farming concept (Aofei, Zhongbei, Yitian, Xinfu); Power grid equipment (Jin 05, Jingda, Huachen, Jazeera, Yubang); Space photovoltaic (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, Huatian, Shenyu, Mengsheng, Hangyu); Chemical industry (Baichuan 2, Hongqiang, Jinjii, Heda, Qixiang 2); Chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu); Photolithography (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts…

Yesterday, convertible bonds opened low, declined, then rose slightly, with increased trading volume. Today, expect moderate gains. There are opportunities in thematic speculation. Overall, prices and premiums of convertible bonds are relatively high, with some traders doing T+0.

Below are last weekend’s bond selections: (Personal selection records, not investment advice) Due to high median values, I relaxed the selection criteria! Overall quality has 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, focusing on relatively low prices, small caps, and concept-rich active varieties, mainly for broad allocation, not for single-position recommendations:

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

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

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

Wantian, Qiangli, Lantian, Wanshun, Yinwei, Hengfeng, Yirui, Mino, Shanshi, Shangsheng…

4: Aggressive low-priced stocks, around 150 yuan, with guaranteed profit/loss ratio, under 500 million, about 20% premium:

Tianhuo, Weitang, Zhonglu, Fengshan…

5: Pure offensive types, about 15% premium, around 160 yuan, scale of 400 million, excluding those potentially forced redemption within two weeks:
None…

6: Defensive types, with moderate premiums (~70%), not heavily reliant on downgrades, under 1 billion, yield around -3%, with diverse concepts:

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

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

Kelun, Lihui, Jingrui 2, Jintian, Hongwei, Mingli, Bainiu, Changhai, Zhengyuan 2…

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

Recently, some convertible bonds have been adjusted, with some starting to meet forced redemption conditions for several days, while others may not, and premiums have been cut down. Examples include: DIO, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Changhai…

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

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride volatility, adopt a whack-a-mole approach, using width instead of depth, while managing risks and pursuing average returns. Use conditional orders and grid trading to maximize volatility utilization. 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 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 phenomena are like illusions, like a dream, like bubbles, like lightning. One should observe with such a mindset, remain unattached, and cultivate the heart. Though water droplets are tiny, they can gradually fill a large vessel…