February 25, 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 personal convertible bond holdings are below 45% of the total portfolio, which is the lower limit, I am not planning to reduce holdings further. I will gradually adjust the portfolio slowly. This week is the last trading week after the Spring Festival, observing whether there will be a New Year红包行情…

Market performance yesterday:

Previous trading day: Convertible bonds rose, A-shares rose, US stocks rose, FTSE A50 rose…

The convertible bond index fell from 2090 on February 13, 2023, to 1753 on February 5, 2024. Now at 2803, with a median of 143.6, a temperature of 96.4 degrees. There are 298 bonds above 130 yuan, up 16 from the previous day, accounting for 80.5%. Six bonds below 110 yuan, unchanged from the previous day, with prices ranging from a low of 0 to a high of 22. In February, there were 5 green and 6 red convertible bonds. Total trading volume was 64.9 billion yuan, 10.9 billion less than the previous day, with a turnover rate of 12.4%, the first day below 60 billion. The convertible bond index rose 27 points to 2803, approaching the historical high of 2805. The average price is 168.3, up 1.8 from the previous day. The median premium is 35.9%, unchanged from the previous day. A-shares traded 2.2184 trillion yuan, 220 billion more than the previous day. Yesterday opened high and moved higher, a strong start to the year, ultimately rising sharply. The sentiment temperature for convertible bonds remains very high; some traders are doing T+ trades to maintain positions.

Yesterday, Shanbei rose 18%, leading the gains. Trading concentration in convertible bonds decreased; the top 5 traded varieties accounted for 24.2% of total convertible bond trading volume, down from 29.1%. The highest single trading volume was 4 billion yuan. Most varieties saw decreased activity, with the number of trading volumes below 10 million dropping from 2 to 2. The market share of these is about 0.6%, with the lowest amount from 7.39 million to 6.35 million yuan.

Today’s convertible bond and market info:

Aojia: Last conversion date. Liqun: Last trading day before maturity: March 26, 2026. Jiayuan: Mandatory redemption. Youfa Youcai: No mandatory redemption. Lanfan: Downward revision. Gude New Material: Shanghai-Shenzhen new stock [subscription]. Honglu: Downward revision meeting…

Tongwei Co.: Planning to acquire 100% equity of Lihua Qingneng, stock suspended. Runda Medical: Shareholders plan to reduce holdings by no more than 2.99%. Hangxin: Change of actual controller. Yongxi: Annual report net profit increased. Guanglian: Shareholders plan to inquire about transferring 4.8% of shares…

Conversion info:

Xingfa: Conversion of 610 million. Jiayuan: Conversion of 88 million. Tianjian Hongbai: 27 million. Rong23 Weier: 12 million. Youcai: 16 million. Feng21: 68 million. Shouhua: 41 million. Zhonghe Hengyi: 18 million.

Today, Huaya, Diuo, Huayuan, Weixin, Yitian: likely to meet the requirements for early redemption within a day. Today, Qiaqia, Lue Zhi: also likely to meet early redemption within a day, possibly triggering downward revision.

Today, no new bonds listed, one new stock subscription, no convertible bond subscriptions. Focus today on: Youcai, Alar, whether multiple convertible bonds will be redeemed early, etc.

Youcai: No mandatory redemption, trading at a 0.3% discount, observe whether there is an opportunity at open; Alar: The main stock surged yesterday, convertible bonds also surged, continue to monitor; Hongbai, Changhai, Hongqiang, and other trends are good, keep paying attention; also watch Ke Lan, Shanshi, Lantian, and other varieties…

Summary:

1. Trump’s 10% global tariffs take effect. China and the US maintain communication regarding Trump’s visit to China.

2. The central bank conducted 600 billion yuan MLF operations, increasing for 12 consecutive months. The LPR rate has remained unchanged for 9 months.

3. During Spring Festival, 596 million domestic trips, with consumption of 834 million yuan, both hitting record highs.

4. Expected hot topics: Power grid equipment (Jin 05, Jingda, Huachen, Jazeera, Yubang), Space photovoltaic (Shuangliang, Fu 22, Aowei, Dier, Ruike, Tian 23, Long 22), AI applications (Fengyu, Dingjie, Shengxun, Jizhi, Runda, Guanzhong, Yaoji, Kelan, Sit, Pulian), Commercial aerospace (Guanglian, Zai 22, Huatian, Shenyu, Mengsheng, Hangyu); Chemical industry (Baichuan 2, Hongqiang, Jinj, Heda, Hengyi, Qixiang 2), Chips (Liyang, Maolai, Luwi, Huicheng, Jingrui 2, Anji, Yanggu); Photolithography (Jingrui 2, Huate, Huamao, Qiangli); also keep an eye on humanoid robots and other concepts.

Yesterday, convertible bonds opened high and moved higher, with moderate fluctuations, trading volume decreased. Expect a slight increase today, continuing the strong start. The overall prices and premium rates of convertible bonds are high, with some doing T+ trades.

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

1. Micro-cap convertible bonds around 130 yuan (under 300 million): Jiali, Silk Road…

2. Slightly above 150 yuan, under 200 million, limited downward volatility, capable of driving premiums, high upper limits, small retracements, excluding recent strong redemption risks: Ailu, Haibo…

3. Relatively low-priced, low-premium varieties around 145 yuan, with about 30% premium, 0.5-5.5 years remaining, good for swing trading: Tianhao, Jinpu, Wantian, Qiangli, Wanshun 2, Chaosheng, Xingqiu, Wansun, Lantian…

4. Aggressive low-price stocks around 150 yuan, with guaranteed profit/loss ratio, under 500 million, about 20% premium: Hengfeng, Fengshan…

5. Pure offensive, about 15% premium, around 160 yuan, scale of 400 million, excluding those with potential early redemption in two weeks: none…

6. Defensive types, not very high premium, around 70%, not fully relying on downward revision, under 1 billion, yield around -3%, with diverse concepts: Zhibang, Gongsong, Kesi, Baichang, Xineng, etc.

7. Actively watched, concept-rich, not too expensive, with good flexibility, usually around 145 yuan: Kelan, Shanshi, Lihe, Jingrui 2, Hongbai, Yirui, Jintian, Hongwei, Weitang, Mino, Mingli…

8. Bond-type varieties, suitable for those unwilling to hold cash: Shenhao, Fuhan, Jiete, Lige, Jiankangfan, Shou 22, Kangyi, Lizhi, Yuxing…

Given the strong redemption pressure currently, upper limits are limited, so avoid overly expensive varieties.

Overall strategy: avoid deep research, avoid concentration, broad allocation, ride the waves, play whack-a-mole, use width instead of depth, hedge risks, pursue average returns. Use conditional orders and grid orders to maximize volatility utilization. Not recommended for 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 good for retail investors. Convertible bond investing is a marathon. Stay on the right path, avoid hype mentality. 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 let the mind arise. Water droplets are tiny but can gradually fill a large vessel…