March 9, 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 stock becomes popular, its price can only move in one direction: up!

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

Yesterday’s overall market performance:

Previous trading day: Convertible bonds rose, A-shares rose, U.S. stocks fell, FTSE A50 declined. U.S. stocks started falling again, and the Japanese and Korean markets have already opened with sharp drops. External factors remain significant. Will it stabilize today?

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now it’s at 2706, with a median of 140.1, a temperature of 91.8 degrees. There are 275 convertible bonds above 130 yuan, up 5 from the previous day, accounting for 75.6%. There are 11 bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 4. In March, there were 3 green and 2 red convertible bonds. Total trading volume was 67 billion yuan, 6 billion less than the previous trading day, with a turnover rate of 13.3%, dropping to 600 billion yuan on the first day. The convertible bond index increased by 10 points to 2706, with an average price of 161.4, up 0.6 from the previous day. The median premium is 31.5%, down 0.7. A-shares traded 2.2194 trillion yuan, 220 billion less than the previous day.

Yesterday, the market opened low and then rose slightly, with minor fluctuations, ending with a small increase. Sentiment for convertible bonds remains high; some traders are doing T+0 trading to maintain positions.

Yesterday, Selic rose 7.45%, leading gains. Trading concentration decreased, with the top 5 bonds accounting for 16.2% to 16.3% of total convertible bond trading volume. The highest single transaction was 3.7 billion yuan. Most bonds saw decreased activity, with the number of bonds traded below 10 million yuan rising from 3 to 7, representing 1.9% of the market. The minimum transaction amount increased from 6.38 million to 7.02 million yuan.

Today’s convertible bond and market updates:

Linuo’s last trading day; Changgao Convertible Bond: subscription on March 9; Muirui Technology: new stock listed on Beijing Stock Exchange; Zuxing New Material: new stock subscription on Beijing Stock Exchange…

Wenke Co.: signed a series of strategic cooperation agreements with Fumao State-owned Assets; Shengtai’s subsidiary sold 190 million yuan worth of holdings; Wentai responded to the Ministry of Commerce regarding the batch ban of Anshi Holland’s Chinese employees’ office software; Shengxun reduced holdings; Guangli’s domestic semiconductor wafer slicing equipment remains at full capacity, with new orders continuously increasing…

Today, DIOY Garden, Red Wall, Fenggong, Liyang are expected to meet potential early redemption within a day; Kewell is also expected to meet early redemption conditions within a day, possibly triggering a price adjustment.

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

Regarding the recent default announcement by Dongshi, the only CCC-rated bond in the market, observe whether it will impact other bonds; trends for Tairui, Guangli, Mino, etc., remain positive, continue to monitor; also watch relatively low-priced bonds like Jingrui 2, Huaxing, Lihe, Qiangli, etc.

Summary of information:
1: The domestic 2nd session will close this week; focus on the 14th Five-Year Plan;
2: International oil prices surged past $100 per barrel;
3: The AI “lobster farming” concept is booming…
4: Hot topics expected: power grid equipment (Jin 05, Jingda, Huachen, Juzhe, Yubang), space photovoltaics (Shuangliang, Fu 22, Aowei, Dier, Reike, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Zhizhi, Runda, Guanzhong, Yaoji, Kelun, Site, 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), lithography photoresist (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts…

Yesterday, convertible bonds opened low and then rose slightly, with decreased trading volume; today is expected to see moderate decline; thematic trading opportunities exist; overall prices and premiums for 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 values, I relaxed the selection criteria somewhat! 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 and small caps, selecting concept-rich and active bonds as much as possible, 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 larger micro-cap bonds under 150 yuan, within 200 million, with limited downward volatility, capable of premium, high upper limit, small retracements, excluding recent potential for early redemption:
Ailu, Haibo…

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

Wan Tian, Qiangli, Lantian, Wanshun 2, Yinwei, Hengfeng, Yirui, Manno, Shanshi, Wanshun 2, Ultrasound, Shangsheng…

4: Aggressive low-price bonds around 150 yuan, with about 20% premium, under 500 million, ensuring certain profit/loss ratio:

Tianhuo, Weitang, Zhonglu, Fengshan…

5: Pure offensive bonds, with about 15% premium, around 160 yuan, scale of 400 million, excluding those likely to be redeemed within two weeks:
None…

6: Defensive bonds, with moderate premiums (~70%), not relying heavily on early redemption, under 1 billion, with yields around -3%, with diverse concepts:

Zhibang, Gongtong, Keso, Baichang, Xineng, Zejian, Haishun…

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

Kelan, Lihe, Jingrui 2, Jintian, Hongwei, Mingli, Bainian, Zhanghai, Zhengyuan 2…

8: Bond-type bonds, suitable for those unwilling to hold no position…
Shenhao, Fuhan, Jiete, Ligh, Jiankang, Shou 22, Jinjii, Zhanghai…

Recently, some convertible bonds have been adjusted, with some meeting early redemption conditions for several days, while others may not, and the premium rate has been reduced accordingly. For example: DIOY, Garden, Huatian, Weitang, Hangxin, Sanjiao, Aidi, Jinjii, Zhanghai…

Current market conditions show clear pressure from early redemption, limiting upside potential. Therefore, I avoid overly expensive bonds.

The overall strategy is not to over-research or concentrate, but to broadly allocate, ride the volatility, adopt a whack-a-mole approach, using width instead of depth, while managing risks and pursuing average returns. Conditional orders and grid trading can be used to maximize volatility. No single-position recommendation; all 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; 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…