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. Over time, once a product gains popularity, its price can only move in one direction: up!

Since individual convertible bond holdings are not high (below 45% of the overall portfolio), which is already the minimum holding limit, I do not plan to reduce positions proactively. Last week, I slightly increased holdings, maintaining the position is indeed not easy…

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 stability can be maintained 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%. There are 11 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 3. In March, there were 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 high volatility, ending slightly lower. Sentiment in the convertible bond market remains high; some traders are doing T+ trades 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 bonds, Liyang convertible bonds: forced redemption; Lianchuang convertible bonds: last trading day before maturity: March 11, 2026.
Weier convertible bonds: last trading day before maturity: April 7, 2026; Kehua convertible bonds: no downsize; Haitian convertible bonds: listed on March 12…

Zhuhai Guanyu: planning to raise no more than 3.3 billion yuan; 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 redemption conditions within one day; today, Wu is likely to trigger a downsize within one day.

No new bonds listed today, no new stock or convertible bond subscriptions. Focus today on: whether Zhongbei’s rebound can stabilize, etc.
Zhongbei is a concept related to computing power; both the stock and convertible bonds 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 AI “lobster farming” concept exploded in popularity…
4: Expected hot topics: Lobster 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, Huatian, Shenyu, Mengsheng, Hangyu); chemicals (Baichuan 2, Hongqiang, Jinj, Heda, Qixiang 2); chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu); lithography adhesives (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 T+ trading.

Below are last week’s bond selections: (personal selection records, not investment advice) Due to high median values, 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, preferably with rich concepts and active trading. These are for broad allocation, not 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 strong 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:

Wan Tian, Qiangli, Lantian, Wanshu, Yinwei, Hengfeng, Yirui, Mino, Shanshi, Shangsheng…

4: Aggressive low-price stocks, around 150 yuan, with guaranteed profit/loss ratio, within 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 with potential strong redemption in 2 weeks:
None…

6: Defensive types, with moderate premiums (~70%), not relying solely on downsizing, within 1 billion, yield around -3%, with diverse concepts:

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

7: Personally more active and concept-rich, not too expensive, with good flexibility, usually around 145 yuan:

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

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

Recently, some convertible bonds have been adjusted, with some meeting redemption conditions for several days, while others may not, and the premium rate has been reduced. For example: DIO, Huayuan, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinj, Changhai…

Current market conditions show clear pressure from redemptions, limiting upside potential. Therefore, 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, and hedge risks. Pursue average returns, possibly using conditional orders and grid trading to maximize volatility utilization. Not recommended for single-position focus. 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—observe with equanimity, dwell nowhere, and let the mind arise freely. Though water droplets are tiny, they gradually fill a large vessel…