2026-3-11 Convertible Bond Portfolio 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. Over time, once a product gains popularity, its price can only move in one direction: up!

Since my personal convertible bond holdings account for a relatively small proportion (about 45% overall), I am at the lower limit of my position and do not plan to reduce holdings proactively. I slightly increased my position last week, maintaining a difficult balance…

Yesterday’s overall market performance:

The previous trading day: Convertible bonds rose, A-shares rose, US stocks closed, FTSE A50 fell. US stocks consolidated last night, Japan and Korea markets 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 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%. Eleven 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 convertible bonds. Total 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 rose 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, 2,600 billion less than the previous day. Yesterday opened high, moved moderately, and ultimately surged significantly. Sentiment remains high; some traders are doing T+0 trading to maintain positions.

Yesterday, Lianrui led with a 13% increase. Convertible bond trading concentration decreased; the top 5 traded varieties accounted for 14-15% of total convertible bond trading, with the highest single trading volume at 2.5 billion. Most varieties saw decreased activity, with the number of trading volumes below 10 million rising from 2 to 4, representing about 0.7% of the market. The minimum transaction amount ranged from 7.16 million to 7.98 million.

Today’s convertible bond and market-related information:

Lianchuang, Xinfu, Zhonghe, Hu’an, and the last conversion date; 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% of Lihao Qingneng; stock resumption; 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 shares; Tianyuan: subsidiary investing 560 million yuan in energy storage projects; Hongqiang: some products’ prices increased by 50-80%; Jiudian reduced holdings; Shangsheng: stop converting from March 13; indicating recent issuance of convertible bonds.

Today, Garden, Hongqiang, Yubang, Titan are expected to meet the redemption conditions within a day; Wining may trigger a downward adjustment within a day.

Today, 0 new bonds are 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 watch Jingrui 2, Weitang, Zhengyuan 2, and other relatively low-priced varieties.

Summary of information:

1. President Trump stated that 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 concept (Aofei, Zhongbei, Yitian, Xinfu); 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 aerospace (Guanglian, Zai 22, Huatian, Shenyu, Mengsheng, Hangyu); chemicals (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 strongly upward, with trading volume decreasing; today is expected to see slight gains. The overall prices and premiums of convertible bonds are relatively high, with some doing T+0 trading.

Below are last weekend’s bond selections: (personal selection records, not investment advice). Due to high median levels, I relaxed the selection standards somewhat! Overall quality improved compared to last week, considering volatility capacity. Of course, the premise is still optimistic about the market, and I plan to hold some convertible bonds, choosing relatively low prices and small caps, preferably with rich concepts and active trading, mainly for broad allocation, not for single-position recommendations.

1. Micro-sized 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, with high upper limits and minimal retracement, excluding recent strong redemption risks: Ailv, Haibo…

3. Relatively low-priced, low-premium varieties around 145 yuan, with about 30% premium, remaining 0.5-5.5 years, good for swing trading: Wan Tian, Qiangli, Lantian, Wanshun 2, Yinwei, Hengfeng, Yirui, Meno, Shanshi, Shangsheng…

4. Low-priced, aggressive stocks around 150 yuan, ensuring certain profit/loss ratio, under 500 million, with about 20% premium: Tianhào, Weitang, Zhonglu, Fengshan…

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

6. Defensive types, with moderate premiums around 70%, not relying heavily on downward adjustments, under 1 billion, with about -3% yield, rich in various concepts: Zhibang, Gongtong, Kesi, Baichang, Xineng, Zejian, Haishun…

7. Actively watched and concept-rich, with relatively low prices and good elasticity, usually around 145 yuan: Kelan, Lihé, Jingrui 2, Jintian, Hongwei, Mingli, Bainian, Changhai, Zhengyuan 2…

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

Recently, some convertible bonds have been adjusted, with some beginning to meet redemption conditions for several days, but may still not qualify. The premium rates have been cut down, such as DIO, Garden, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Changhai…

Current market conditions show significant redemption pressure, limiting upper bounds, so I avoid overly expensive varieties.

Overall strategy: avoid deep research, focus on broad allocation, ride the 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. Not recommended for single-position holdings. All selected bonds are personal summaries, not investment recommendations. 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 dreams, illusions, bubbles, or shadows; like dew or lightning. Observe with such a mindset, without attachment, and let the mind arise naturally. Though water droplets are tiny, they gradually fill a large vessel…