March 18, 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 personal convertible bond holdings are not a large proportion (about 45% overall), I am at the lower limit of holdings and do not plan to reduce positions proactively. Last week, I slightly increased holdings; maintaining positions is indeed challenging…

Yesterday’s overall market performance:

Previous trading day: Convertible bonds fell, A-shares fell, U.S. stocks rose, FTSE A50 rose, U.S. stocks rose last night, Japan and Korea markets opened slightly higher. External factors remain significant. Observe whether the market can stabilize today; overall, convertible bonds are still unstable. Do not increase or adjust positions too quickly. If your holdings are very low, you can start adjusting to below 50%.

The convertible bond index dropped from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2600, with a median of 136, a temperature of 84.9 degrees. There are 247 convertible bonds above 130 yuan, 12 fewer than the previous day, accounting for 68.5%. There are 9 bonds below 110 yuan, 1 fewer than the previous day, with prices ranging from a low of 0 to a high of 2. In March, 8 green and 4 red convertible bonds. Total trading volume for convertibles was 66 billion, 7.4 billion less than the previous trading day, with a turnover rate of 13%, marking the first day below 600 billion. The convertible bond index fell 52 points to 2600, with an average price of 153.8, down 3.6 from the previous day. The median premium is 29.7%, unchanged from the previous day. A-shares traded 22,247 billion, 1,200 billion less than the previous day. Yesterday opened low and declined sharply, ending at the lowest point. Sentiment for convertibles remains relatively high; some traders are maintaining positions.

Yesterday, Tongyu rose 3.5%, leading gains. Convertible bond trading concentration decreased; the top 5 traded varieties accounted for 16.7% to 17% of total convertible bond trading, with the highest single trading volume at 3.5 billion. Most varieties saw increased activity; the number of varieties with trading volume below 10 million remained at 2, accounting for 0.6% of the market, with the lowest amount from 7.18 million to 5.6 million.

Today’s convertible bond and market news:

Mengsheng last trading day; Hongtu meeting on revision; Zh26 convertible bonds; Doctor bonds: 【Subscription】; Pu’ang Medical: new stock on Beijing Stock Exchange 【Subscription】;
Zuxing New Materials: new stock on Beijing Stock Exchange 【Listing】; Zhongte Convertible Bond: no revision; Tonglian Convertible Bond: listed on March 20; Jianyou Convertible Bond: last trading day before maturity: April 17, 2026;

Huitian New Materials: wholly owned subsidiary experienced a fire and was ordered to halt production; Yongji Shares: controlling shareholder plans to reduce holdings by no more than 2%; Lidao New Materials: plans to invest 280 million yuan to expand battery aluminum foil project; Daimai, Huate, and Wantuo reduce holdings;

Today, no new bonds are listed; one new stock subscription; two convertible bond subscriptions. Focus today: whether convertible bonds can stabilize, etc.

Are multiple varieties like Jinji, Ala, etc., able to meet the conditions for mandatory redemption? Meno, Huaxing, and others show good trends; continue to monitor. Keep an eye on relatively low-priced varieties like Jingrui 2, Zhengyuan 2, Huaxing, etc.

Summary of information:
1: The Ministry of Foreign Affairs states that the U.S. has clarified that President Trump’s visit to China is unrelated to the Hormuz navigation issue.
2: The Ministry of Finance will continue to implement more proactive fiscal policies this year.
3: Expected hot topics: computing power (Aofei, Zhongbei, Yitian, Xinfu); power grid equipment (Jin05, Jingda, Huachen, Jazeera, Yubang); space photovoltaics (Shuangliang, Fu22, Aowei, Dier, Reco, Tian23, Long22); AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelun, Sit, Pulian); commercial aerospace (Guanglian, Zai22, Huatian, Shenyu, Mengsheng, Hangyu); chemicals (Baichuan2, Hongqiang, Jinji, Heda, Qixiang2); chips (Liyang, Maolai, Luv, Huicheng, Jingrui2, Anji, Yanggu); lithography adhesives (Jingrui2, Huate, Huamao, Qiangli); plus robotics and other concepts remain under observation…

Yesterday, convertible bonds opened low and declined sharply, with decreased trading volume; today is expected to see slight decline; whether they can stabilize is a key focus. The overall prices and premium rates of convertible bonds are relatively high, with some traders engaging in T+T strategies.

Below are bond selections from last weekend (personal record, not investment advice). Due to high median levels, 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, selecting 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, Ailv…

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

3: Relatively low-priced, low-premium varieties, around 142 yuan, with about 30% premium, maturity between 0.5-5.5 years, suitable for swing trading:

Wanshun2, Wantian, Jinpu, Qiangli, Weitang, Lantian, Shangsheng, Hengfeng, Wanquan…

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

Tianhuo, Meno, Yinwei, Fengshan…

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

6: Defensive types, with moderate premiums around 70%, not heavily reliant on redemption, market cap under 1 billion, yield around -3%, with diverse concepts:

Gongtong, Kesi, Baichang, Xineng, Zejian, Haishun, Haineng, Huitian, Yuxing…

7: Actively watched and concept-rich, with relatively low prices, good flexibility, usually around 140 yuan:

Kelan, Lihe, Jingrui2, Jintian, Hongwei, Mingli, Bairun, Changhai, Zhengyuan2, Sanjiao, Huaxing…

8: Bond-type varieties, suitable for those unwilling to hold no position…
Shenhao, Fuhan, Jiete, Ligao, Jiankang, Shou22, Kangyi, Lizhi, Jinxing23, Mars, Taiji21, Xinhai…

Recently, some convertible bonds have been adjusted to meet redemption conditions for several days, while others may not, with the premium rate decreasing. Examples include: DIO, Garden, Huaxing, Weitang, Hangxin, Sanjiao, Aidi, Jinji, Changhai…

Current market conditions show significant redemption pressure, limiting upside potential. Therefore, I avoid overly expensive varieties…

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride volatility, play whack-a-mole, use width instead of depth, hedge risks, pursue average returns, and consider conditional orders and grid trading to utilize volatility. 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 dew or lightning. Practice such views, be unattached, and cultivate your mind. Water droplets are tiny but can gradually fill a large vessel…