March 6, 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 or bond becomes popular, its price can only move in one direction: up!

Since my personal convertible bond holdings are not a large proportion (less than 45% of the total portfolio), I consider this my minimum holding level. I do not plan to reduce my holdings actively, but last week I was still forced to cut some positions. Maintaining the portfolio is indeed challenging.

Market overview yesterday:

The previous trading day: Convertible bonds rose, A-shares rose, U.S. stocks fell, FTSE A50 declined. U.S. stocks started falling again, and Japan and Korea markets opened lower. External factors continue to influence the market. Will the rebound today last?

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now it’s at 2695, with a median of 140.1, a temperature of 90.8 degrees. There are 270 convertible bonds above 130 yuan, up 2 from the previous day, accounting for 74.3%. 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 3 green and 1 red convertible bonds. Total trading volume was 73 billion yuan, 5 billion less than the previous day, with a turnover rate of 14.5%, reaching 700 billion yuan on the 7th day. The convertible bond index increased by 0.5 points to 2695, with an average price of 160.8, unchanged from the previous day. The median premium is 32.2%, slightly lower than yesterday. A-shares traded 24,128 billion yuan, up 200 billion from the previous day. Yesterday, the market opened high and then declined, with slight fluctuations, ending with a small overall gain. Sentiment remains high; some traders are doing T+0 trading to maintain positions.

Yesterday, Yongji led with an 8.24% increase. Convertible bond trading concentration decreased; the top 5 traded varieties accounted for 16.2% of total convertible bond trading volume, down from 20.4%. The highest single-trade volume was 2.5 billion yuan. Most varieties saw decreased activity, with the number of bonds traded below 10 million dropping from 1 to 3. The minimum trading amount decreased from 9.26 million to 6.38 million yuan.

Today’s convertible bond and market info:

Hu’an, Zhonghe, Guanglian are the last trading days; Changgao convertible bonds: subscription on March 9.

Baichuan 2: Total guarantee balance among parent, subsidiary, and grandchild companies is 4.968 billion yuan, accounting for 250.79% of the latest audited net assets.

Dongshi: Matures on April 8, 2026. The company is expected to default on principal and interest; official default announced.

Julong reduced holdings; Yinlun signed a $131 million contract; Jincheng signed a contract worth 166 million yuan.

Today, Diu Garden is expected to meet the redemption condition with one day to spare; WU is also close to meeting the condition for potential adjustment.

No new bonds or stocks are listed today, and no new convertible bonds are available for subscription. Focus today: Will Dongshi’s rebound stabilize? Others include trends in Guangli, Huaxing, and more.

Dongshi has officially defaulted, the only CCC-rated bond in the market. Watch if this impacts other varieties. Trends in Guangli, Huaxing, and others remain positive; continue monitoring. Also, pay attention to relatively low-priced stocks like Garden, Aidi, Jingrui 2, Qiangli, etc.

Summary:

1. Two domestic conferences are opening; Premier Li Qiang’s government work report projects economic growth of 4.5-5%, CPI at 2%, and the 14th Five-Year Plan.

2. Expected hot topics: future energy, green fuels, smart economy, and two sessions concepts; power grid equipment (Jin 05, Jingda, Huachen, Jiazhe, 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, Zhan 22, Huati, Shenyu, Mengsheng, Hangyu), chemicals (Baichuan 2, Hongqiang, Jinjia, Heda, Qixiang 2), chips (Liyang, Maolai, Luwei, Huicheng, Jingrui 2, Anji, Yanggu), photoresists (Jingrui 2, Huate, Huamao, Qiangli), plus humanoid robots and other concepts.

Yesterday’s convertible bonds opened high and declined slightly, with a small increase overall. Trading volume decreased. Expect a slight decline today; thematic speculation opportunities remain. Overall prices and premiums are relatively high, with some T+0 trading.

Last weekend’s bond selection (personal notes, not investment advice): Due to high median levels, I relaxed some criteria. Overall quality improved compared to last week, considering volatility. Still optimistic about the market and prepared to hold some bonds, focusing on relatively low prices, small caps, and concept-rich active varieties—mainly for broad allocation, not single-stock recommendations.

1. Micro-cap bonds around 130 yuan (under 300 million) for inclusion: Silu…

2. Bonds under 150 yuan, under 200 million, with limited downward volatility, high potential for premium, avoiding recent forced redemptions: 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: Tianhao, Jinpu, Wantian, Qiangli, Lantian, Wanquan, Mino, Yinwei, Lihe…

4. Aggressive, around 150 yuan, with about 20% premium, under 500 million, ensuring profit/loss ratio: Hengfeng, Fengshan…

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

6. Defensive bonds, with moderate premiums (~70%), not relying solely on call features, under 1 billion, yield around -3%, with diverse concepts: Zhibang, Gongtong, Kesi, Baichang, Xineng, Zhejiang Construction…

7. Active and concept-rich bonds, with relatively low prices and good flexibility, around 145 yuan: Kelun, Shanshi, Lihe, Jingrui 2, Yirui, Jintian, Hongwei, Weitang, Chaosheng, Mino, Mingli, Bainiu…

8. Bonds with strong credit features, suitable for those unwilling to hold cash: Shenhao, Fuhan, Jiete, Lige, Jiankang, Shou 22, Kangyi, Lizhi, Jinxing 23, Mars, Tai 21, Yuxing…

Recent adjustments in convertible bonds include some meeting redemption conditions, but many still do not, and premiums have been reduced accordingly, e.g., Diu, Garden, Hongqiang, Huaxing, Weitang, Hangxin, Guangli, Sanjiao, Aidi, Jinjia, Changhai…

Current market conditions show significant pressure from forced redemptions, limiting upside potential. Avoid overly expensive bonds.

Overall strategy: Keep it simple—broad, opportunistic, riding volatility, using grid and conditional orders to leverage fluctuations. Focus on risk management and average returns. All bond selections are personal summaries, not investment advice. Investing involves risks; proceed 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, avoid hype. This is the truth and the cause-and-effect. All phenomena are like illusions, like a dream, bubble, or lightning—view them as such, without attachment, and cultivate a calm mind. Water droplets are tiny but can gradually fill a large vessel.