April 1, 2026 Convertible Bonds Rebalancing

Investing is a popularity contest. Buying in when popularity is at its peak is the most dangerous. At that point, every positive factor and viewpoint has already been priced in, and there will never be new buyers again…

The safest investment with the greatest profit potential is to buy when nobody likes it. After some time, once the product becomes popular, its price can only move in one direction: up!

At the moment, my personal convertible bond position ratio is not very high (about 45% of total exposure overall). We’re near the lower end of my holdings. To deal with the possibility of more new highs, I’m not planning to proactively cut positions for now. Last week I added a little; this year, with only the first three months so far, the maximum drawdown is already 8.2%, which is more than the whole of last year. This is an unsteady year for investing…

Yesterday’s overall market performance:

The day before the previous trading day: convertible bonds fell, A-shares fell, U.S. stocks rose, and FTSE A50 rose. U.S. stocks surged sharply last night, and the Japanese and Korean stock markets that had already opened also rose sharply. It’s unclear whether A-shares will follow today or by how much. I expect the market to rise today. External factors are still very significant. We’ll watch whether convertible bonds can hold steady today. In terms of strategy recently, things are not stable overall—so look less and move less. Don’t add positions or adjust your allocation too quickly. If your position size is very low, you can start gradually rebalancing to below 50%…

The convertible bond index fell from 2090 on Feb 13, 2023 to 1753 on Feb 5, 2024. Then to the current 2538. The current median is 132.7, the temperature is 79.8 degrees. There are 210 convertible bonds above 130 yuan, which is 8 fewer than the day before, accounting for 60.2%;; 13 are below 110 yuan, same as the day before. The price hit the lowest 0/high 2. In March, there were 14 green and 8 red convertible bonds. The convertible bond index for the whole month fell 8.6%, a big pullback. Convertible bond trading was 66.7 billion yuan, up 0.3 billion from the previous trading day. The turnover rate was 13.4%, dropping to 60 billion yuan for the second day. The convertible bond index fell 37 points to 2538. The average price was 149.6, down 2.7 from the day before. The median premium was 34.2%, up 0.4 from the day before. A-share trading was 200.61 billion yuan, up 80 billion from the day before. Yesterday opened flat, then rose and dipped, drifting southeast all the way, and finally fell sharply. The sentiment temperature for convertibles was generally average; with T+ operations, maintain an appropriate position size;

Yesterday, TaiFu’s convertible bond rose the most, with a gain of 17.4%. The concentration of convertible bond trading increased. The top 5 traded products accounted for convertible bonds’ total trading value rising from 25.5% to 31.2%. The highest single stock’s trading value was 6 billion yuan. Most products saw lower activity; the number of products with trading value below 10 million yuan decreased from 3 on the day before to 5. That’s 1.4% of market products’ share. The minimum amount increased from 5.08 million to 6.97 million yuan…

Market-related information for today:

Guangli, Zhongchong 2, last trading day; Jiayuan, last conversion day; Shanbo convertible bond: no downwards adjustment; Chuangda New Materials: a Beijing Stock Exchange new stock [Subscription]; Hongfang Hong Tunnel Co., Ltd. Expressway REIT (508020): [Subscription]; …

Jintian: a 600 million yuan Vietnam project; Changgao: its subsidiary won a bid of 181 million yuan for a State Grid project…

Today Ala, Set, Zhenhua need only one more day to potentially meet the conditions for an early redemption. Today Zhejiang Mine and Longda need only one more day to potentially trigger a downwards adjustment.

Today, 0 new convertible bonds were listed, 1 new stock was subscribed for, and 0 convertible bonds were subscribed for. What to watch today: TaiFu, Ala, whether their convertible bonds can hold steady, etc.

TaiFu: shareholder changes. Yesterday’s underlying stock hit the daily limit—watch it. Ala: the underlying stock fell yesterday; it still needs to hold on for 4 more days without meeting the early redemption conditions. Xingrui, Jintian, and others have good trends—keep watching. Watch for rebalancing backup options among relatively low-priced issues, such as Kelan, Lihé, Yaoji, Huaxing, Qiangli, etc…

Information summary:
1: U.S. President Trump said that the U.S.’s military action against Iran is about to end, and Iran also released statements about easing the conflict; U.S. stocks surged;
2: Expected hot themes: computing power (Aofei, Zhongbei, Yitian, Xinfu); grid equipment (W05, Jinda, Huachen, Jaze, Yubang) space-based solar (Shuangliang, F22, Ovie, Tire, Riko, T23, Long22) AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Rundá, Guanzhong, Yaoji, Kelan, Sitet, Pulian) commercial aerospace (Guanglian, Zai22, Shenyu, Mengsheng, Hangyu); chemicals (Jinqi, Hedá, Qixiang2); chips (Maolai, Luowei, Huicheng, Jingrui2, Anji, Yanggu, Sunx); photoresist (Jingrui2, Huate, Huamai, Qiangli); Also keep an eye on humanoid robots and other concepts…

Yesterday, convertible bonds opened flat, then fell, and fell sharply; convertible bond trading volume increased. Today is expected to surge sharply. There are still no signs that convertibles have stabilized. There may be opportunities for theme-driven trading. Overall prices and premium rates of convertibles are both high, and with T+ strategies you can do T+ operations…

The following are the convertible bond picks from last weekend: (personal notes of convertible bond selection; not investment advice) Due to the high median level, I loosened the selection standards a bit! Overall quality improved compared with last week. Everything was considered with volatility tolerance in mind. Of course, the premise is that I still believe in the outlook. I’m still planning to hold part of my convertible bond positions, choosing relatively low-priced and relatively small-cap issues. As much as possible, I choose actively traded products with rich concepts—all are for “spreading risk by laying out a big pancake” allocation, not recommendations for a single holding: (pure-debt-like products are also not recommended)

1: Convertible bonds around 130 yuan (micro-cap, within 300 million) can be included in the watch list:
Wanshi, Shanshi, Kelan, Juhé, Silk Road, Yirui, Jiudian2 …

2: Micro-caps within 200 million at 150 yuan or less. Limited downside volatility; can lift premium; high upper limit; less drawdown. Exclude those that might meet early redemption recently:
Ailelu, Haibo …

3: Relatively low-priced and low-premium issues, prices between 140, premiums around 30, with remaining life of 0.5 to 5.5 years—good for trading the range:

Qiangli, Waitong, Ultrasonic, Jinpu, Wantian…

4: Relatively low-priced “charging” team, around 150, ensuring a certain risk-reward ratio; within 500 million; premium around 20:

Xingang, Rui feng, Fushan …

5: Pure offensive type, premium rate around 15, around 160, size 400 million, exclude those that might meet early redemption conditions within 2 weeks:
None …

6: Pure defensive type, premium rate not particularly high, around 70%, not completely relying on downwards adjustment; within a 1 billion yuan cap; yield around -3; make the concepts as rich as possible in each category:

Gongtong, Kesí, Zhejiang Construction, Haineng, Huitian, Yuxing, Dongya, Zhite, Dongbao…

7: Personally watch more active types—more concepts, price not too high, decent elasticity—usually around 140…

Kelan, Lihé, Jingrui2, Hengfeng, Hongwei, Mingli, Changhai, Zhengyuan2, Sanjiao, Huaxing, Yaoji, Xingrui …

Recently, after adjustments, some convertibles have already met early redemption conditions for several days, while others may not. Premium rates have already been squeezed down, such as: Eiao, Huayuan, Huaxing, Waitong, Hangxin, Sanjiao, Aidi, Jinqi, Changhai, Ala, Saité …

With early redemption being more clearly pressured in the current situation, it limits the ceiling. Therefore, I’ll avoid choosing issues that are too expensive as much as possible…

The overall strategy is: don’t do deep research, don’t concentrate, “spread it out,” eat volatility, and play the “hit-and-run with a gopher” mode. Replace depth with breadth, while also defending against risks, and pursuing average returns. It can be paired with conditional orders, and grid orders can be used as well—to make as much use of volatility as possible. Not recommending any single holding. Also, all convertible bond picks are based on my own summaries for reference purposes only, not investment recommendations. Investing involves risk; enter the market cautiously.

For doing convertible bonds, never forget the original intention. Convertible bonds, based on how things look right now, are currently very good products for retail investors. Convertible bond investing is a marathon—you must stick to the right path, stay away from a speculation mindset. This is the truth, and also cause and effect. All efforts are like a dream—like bubbles and shadows; like dew that appears and vanishes like lightning and sparks. One should act accordingly; and one should not be attached—yet one should give rise to that heart. Though a water drop is small, it gradually fills and eventually becomes a grand vessel…