Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - On December 19, the convertible bond market followed the underlying stocks and rose, with an increase in valuation [1]. - The small - cap value style was relatively dominant, and the trading sentiment in the convertible bond market heated up [1]. Summary by Related Catalogs Market Overview - Index performance: The CSI Convertible Bond Index rose 0.38% month - on - month, the Shanghai Composite Index rose 0.36%, the Shenzhen Component Index rose 0.66%, the ChiNext Index rose 0.49%, the SSE 50 Index rose 0.19%, and the CSI 1000 Index rose 0.79% [1]. - Market style: Small - cap value was relatively dominant. Large - cap growth rose 0.40%, large - cap value fell 0.17%, mid - cap growth rose 1.05%, mid - cap value rose 0.91%, small - cap growth rose 0.97%, and small - cap value rose 1.07% [1]. - Fund performance: The trading volume in the convertible bond market increased. The trading volume of the convertible bond market was 71.204 billion yuan, a month - on - month increase of 11.42%; the total trading volume of Wind All A was 1.748742 trillion yuan, a month - on - month increase of 4.29%; the net outflow of the main funds in the Shanghai and Shenzhen stock markets was 4.444 billion yuan, and the yield of the 10 - year treasury bond decreased by 0.48bp to 1.83% [1]. Convertible Bond Price - The convertible bond price center increased, and the proportion of high - price bonds rose. The weighted average closing price of convertible bonds was 132.77 yuan, a month - on - month increase of 0.35%. The closing price of equity - biased convertible bonds was 192.56 yuan, a month - on - month decrease of 1.43%; the closing price of debt - biased convertible bonds was 119.54 yuan, a month - on - month increase of 0.15%; the closing price of balanced convertible bonds was 129.14 yuan, a month - on - month increase of 0.14% [2]. - The proportion of bonds with a closing price above 130 yuan was 55.32%, a month - on - month increase of 1.58pct; the largest change occurred in the 110 - 120 (including 120) range, with a proportion of 9.09%, a month - on - month decrease of 1.5pct; there was 1 bond with a closing price below 100 yuan. The median price was 131.51 yuan, a month - on - month increase of 0.55% [2]. Convertible Bond Valuation - Valuation increased. The fitted conversion premium rate of 100 - yuan par value was 32.51%, a month - on - month increase of 0.14pct; the overall weighted par value was 99.53 yuan, a month - on - month increase of 0.86%. The premium rate of equity - biased convertible bonds was 15.45%, a month - on - month decrease of 0.27pct; the premium rate of debt - biased convertible bonds was 84.79%, a month - on - month decrease of 0.38pct; the premium rate of balanced convertible bonds was 26.39%, a month - on - month decrease of 0.10pct [2]. Industry Performance - On December 19, most underlying stock industries rose, with 27 industries rising. In the A - share market, the top three industries in terms of increase were commerce and retail (+3.66%), light industry manufacturing (+2.17%), and environmental protection (+2.06%); the top three industries in terms of decline were banking (-0.44%), electronics (-0.29%), and coal (-0.29%) [3]. - In the convertible bond market, 23 industries rose. The top three industries in terms of increase were environmental protection (+4.16%), building materials (+2.40%), and building decoration (+1.65%); the top three industries in terms of decline were non - bank finance (-1.26%), national defense and military industry (-0.16%), and pharmaceutical biology (-0.15%) [3]. - Closing price: The large - cycle sector increased by 1.53% month - on - month, the manufacturing sector increased by 0.49%, the technology sector increased by 0.21%, the large - consumption sector increased by 0.46%, and the large - finance sector decreased by 0.68% [3]. - Conversion premium rate: The large - cycle sector decreased by 1.5pct month - on - month, the manufacturing sector decreased by 0.33pct, the technology sector decreased by 0.96pct, the large - consumption sector decreased by 1.8pct, and the large - finance sector decreased by 0.86pct [3]. - Conversion value: The large - cycle sector increased by 2.65% month - on - month, the manufacturing sector increased by 0.69%, the technology sector increased by 0.99%, the large - consumption sector increased by 1.19%, and the large - finance sector decreased by 0.47% [3]. - Pure - bond premium rate: The large - cycle sector increased by 2.1pct month - on - month, the manufacturing sector increased by 0.75pct, the technology sector increased by 0.27pct, the large - consumption sector increased by 0.56pct, and the large - finance sector decreased by 0.79pct [4].

Report Industry Investment Rating - Not provided in the report Core Viewpoints - Last week, A-shares were volatile and stabilized, with reduced market volume. Policies on stimulating domestic demand and the upcoming full - scale customs closure of Hainan Free Trade Port boosted the large - consumption sector. The medical and commercial sectors performed well, while the previously rising TMT and new energy sectors lagged. The bond market first declined and then rose. The 10 - year Treasury bond yield closed at 1.83% on Friday, down 0.88bp from the previous week. Most convertible bond issues rose, with the CSI Convertible Bond Index up 0.48% for the week, the median price up 0.81%, and the calculated arithmetic average parity up 0.73% for the week, and the market conversion premium rate down 0.36% compared with the previous week [1][2][9] - In the coming week, the small - and micro - cap stocks performed well last week, and convertible bonds rose slightly following the underlying stocks. The median price rose to 132 yuan, and the premium rates of convertible bonds in most parity ranges increased. However, convertible bond ETFs have faced outflow pressure for 4 consecutive weeks, showing a "passive to active" structural feature. Recently, the willingness of several convertible bond issuers to promote conversion has significantly increased. Under the expectation of the spring rally, the parity of convertible bonds is expected to further rise. The number of issues actually facing maturity repayment is relatively limited, and some issues with longer remaining terms still have high conversion opportunities. Currently, the valuation of the convertible bond market is still at a historical high, and it is difficult to find overall opportunities. Relative - return investors are recommended to allocate small - position, well - balanced non - callable and suitable - premium equity - biased convertible bonds, and absolute - return investors are advised to focus on high - volatility underlying stocks below 130 yuan or industry leaders with historically low valuations [3][18] Summary of Relevant Catalogs Market Focus Last Week (December 15 - December 19, 2025) Stock Market - A - shares were volatile and stabilized with reduced volume. Policies and the Hainan event boosted the consumption sector, and the medical and commercial sectors performed well due to the flu and AI. The TMT and new energy sectors lagged. The market showed daily fluctuations in indices and sector performances. Most of the Shenwan primary industries rose, with the top - gainers being commerce and retail (6.66%), non - bank finance (2.90%), beauty and care (2.87%), social services (2.66%), and basic chemicals (2.58%), while electronics (-3.28%), power equipment (-3.12%), machinery (-1.56%), and comprehensive (-1.53%) underperformed [8][9] Bond Market - The bond market first declined and then rose. Despite weak economic data and equity market adjustments at the beginning of the week, bond market sentiment was poor. The central bank's 1000 - billion - yuan 14 - day reverse repurchase operation on Thursday stabilized capital expectations, and bond market sentiment recovered in the second half of the week. The 10 - year Treasury bond yield closed at 1.83% on Friday, down 0.88bp from the previous week [1][9] Convertible Bond Market - Most convertible bond issues rose. The CSI Convertible Bond Index was up 0.48% for the week, the median price was up 0.81%, the calculated arithmetic average parity was up 0.73% for the week, and the market conversion premium rate was down 0.36% compared with the previous week. The arithmetic average conversion premium rates of convertible bonds in the parity ranges of [90,100), [100,110), and [110,120) increased by 4.71%, 0.84%, and 0.85% respectively, reaching the 100%, 98%, and 94% percentile values since 2023. Most industries in the convertible bond market rose, with commerce and retail (+5.34%), light industry manufacturing (+4.73%), steel (+2.13%), and beauty and care (+1.95%) leading, while non - bank finance (-4.26%), communication (-0.50%), coal (-0.39%), and household appliances (-0.31%) lagged. The top - gainers among individual issues were Jiamei, Huati, Zai 22, Huicheng, and Huayi convertible bonds, and the top - losers were Nenghui, Borui, Furong, Jingda, and Weidao convertible bonds. The total trading volume of the convertible bond market last week was 3073.22 billion yuan, with an average daily trading volume of 614.64 billion yuan, an increase from the previous week [2][9][12] Views and Strategies (December 22 - December 26, 2025) - Small - and micro - cap stocks performed well last week, and convertible bonds rose slightly following the underlying stocks. The median price rose to 132 yuan, and the premium rates of convertible bonds in most parity ranges increased. However, convertible bond ETFs have faced outflow pressure for 4 consecutive weeks, showing a "passive to active" structural feature. Some low - price convertible bonds and large - cap, high - rating, near - maturity convertible bonds such as Huaan, Guotou, and Nenghua adjusted significantly, reflecting market concerns about the credit of low - quality issues and the conversion ability of near - maturity issues [3][18] - Recently, the willingness of several convertible bond issuers to promote conversion has significantly increased. Under the expectation of the spring rally, the parity of convertible bonds is expected to further rise. The number of issues actually facing maturity repayment is relatively limited, and some issues with longer remaining terms still have high conversion opportunities. If there are significant adjustments, investors can buy at low prices [3][18] - Currently, the valuation of the convertible bond market is still at a historical high, and it is difficult to find overall opportunities. Relative - return investors are recommended to allocate small - position, well - balanced non - callable and suitable - premium equity - biased convertible bonds in sectors such as power, storage, domestic substitution of semiconductor equipment and materials, commercial aerospace, and humanoid robots. Absolute - return investors are advised to focus on high - volatility underlying stocks below 130 yuan or industry leaders in sectors such as two - wheeled vehicles, cosmetics, and breeding with historically low valuations [3][18] Valuation Overview - As of December 19, 2025, for equity - biased convertible bonds, the average conversion premium rates in the parity ranges of 80 - 90 yuan, 90 - 100 yuan, 100 - 110 yuan, 110 - 120 yuan, 120 - 130 yuan, and above 130 yuan were 43.38%, 39.68%, 28.72%, 20.96%, 12.59%, and 13.84% respectively, at the 90%/82%, 98%/100%, 95%/97%, 93%/94%, 80%/70%, and 98%/98% percentile values since 2010/2021. For debt - biased convertible bonds, the average YTM of issues with a parity below 70 yuan was -3.99%, at the 2%/5% percentile values since 2010/2021. The average implied volatility of all convertible bonds was 44.18%, at the 90%/96% percentile values since 2010/2021. The difference between the implied volatility of convertible bonds and the long - term actual volatility of the underlying stocks was 3.03%, at the 86%/87% percentile values since 2010/2021 [19] Primary - Market Tracking - Last week (December 15 - December 19, 2025), there were no announcements of convertible bond issuances or listings. As of December 19, there were no announcements of convertible bond issuances in the coming week (December 22 - December 26, 2025), but Puxian Convertible Bond will be listed. Puxian Convertible Bond has an issue size of 243 million yuan, a credit rating of A+, and is scheduled to be listed on December 22. The underlying stock is Puxian Software, with a market value of 4.663 billion yuan as of December 19. The company focuses on management software development in the energy industry. In 2024, its revenue was 836 million yuan (+11.6% year - on - year), and the net profit was 121 million yuan (+95.06% year - on - year). From Q1 - Q3 2025, the revenue was 300 million yuan (+2.17% year - on - year), and the net profit was 100,000 yuan (-90.07% year - on - year) [27] - Last week, the exchanges approved the registration of 2 companies (Shangtai Technology and Jinpan Technology), the listing committees passed the applications of 3 companies (Zhanggao Electric, Doctor Glasses, and Haitian Co., Ltd.), the exchanges accepted the applications of 2 companies (Ruihu Mould and Nanxin Technology), the general meetings of shareholders passed the proposal of 1 company (Zuoli Pharmaceutical), and the board of directors proposed the issuance of 1 company (Tianshan Electronics). As of now, there are 93 convertible bonds to be issued, with a total scale of 146.9 billion yuan, including 5 issues with a total scale of 5.9 billion yuan that have been approved for registration and 10 issues with a total scale of 8.52 billion yuan that have passed the listing committee [28]

1. Report Industry Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints of the Report - Risk preference recovery and the strengthening of the equity nature in the convertible bond market suggest that the liquidity style is expected to strengthen again. The convertible bond market has entered the "high-beta stage of a slow bull market", with the pricing logic shifting from "bond defense" to "equity elasticity". The liquidity factor is expected to strengthen once more [1]. - In the short - term, as the global market's expectation of recent liquidity tightness eases marginally, the correction space of the convertible bond market with sufficient incremental funds may be limited. Under the slow - bull expectation, the equity market's spring rally is in the making, and the convertible bond market still has structural opportunities [2][11]. - In the medium - term, the marginal improvement in liquidity and market structural characteristics highlight the allocation value of the liquidity style. The liquidity factor is expected to shift from "steady contribution" to "strong performance" [3][18]. - In the long - term, the convertible bond market shows obvious liquidity premium. The liquidity style has the best performance under a market - neutral condition [4][12]. 3. Summary According to the Table of Contents 3.1 Convertible Bond Weekly Thinking - From December 15th to December 19th, 2025, the small - and medium - cap stocks' trend was initially weak and then strong. The convertible bond market fluctuated upward following the underlying stocks. High - priced targets performed weakly, while low - priced convertible bonds performed strongly. The increase of convertible bonds was significantly lower than that of the underlying stocks due to the drag of high - priced convertible bonds. In terms of industries, the materials (+1.62%), optional consumption (+1.04%), and healthcare (+0.97%) sectors strengthened, while the finance (-0.43%) and information technology (-0.11%) sectors weakened [2][11]. - The Bank of Japan's interest rate hike was finalized this week, removing the suppressing factor for risk preference. The U.S. CPI data on Friday was lower than market expectations, providing more room for the subsequent monetary easing policy of the Federal Reserve [2][11]. 3.2 Convertible Bond Market Tracking 3.2.1 Convertible Bond Market Conditions - The report presents the performance of various convertible bond indices in different time periods (recent week, recent two weeks, since September, recent month, recent two months, recent half - year, and recent one - year), such as the Wind Convertible Bond Energy Index, Wind Convertible Bond Materials Index, etc [21]. 3.2.2 Convertible Bond Individual Securities - The report shows the top ten and bottom ten convertible bond individual securities in terms of price increase and decrease in the recent week, but specific names and data are not fully presented [22][24]. 3.2.3 Convertible Bond Valuation - The report provides the moving average trends of the conversion premium ratios of bond - like, balanced, and equity - like convertible bonds over the weeks [28][30][34]. 3.2.4 Convertible Bond Prices - The report shows the trends of the proportion of high - priced bonds and the median price of convertible bonds [31][32].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - On December 18, 2025, half of the convertible bond industries rose, and the valuation compressed month - on - month. The CSI Convertible Bond Index rose 0.06% month - on - month, the Shanghai Composite Index rose 0.16%, the Shenzhen Component Index fell 1.29%, the ChiNext Index fell 2.17%, the SSE 50 Index rose 0.23%, and the CSI 1000 Index fell 0.22%. The market style favored large - cap value stocks. The trading sentiment in the convertible bond market heated up [1]. - The convertible bond price center increased, and the proportion of high - price bonds rose. The overall weighted average closing price of convertible bonds was 132.37 yuan, with no change from the previous day. The valuation compressed, with the 100 - yuan par - value fitted conversion premium rate at 32.29%, down 1.16 pct from the previous day [2]. - In the A - share market, the top three industries with the largest declines were power equipment (-2.22%), communication (-1.58%), and electronics (-1.51%); the top three industries with the largest increases were banks (+1.97%), coal (+1.89%), and petroleum and petrochemicals (+1.25%). In the convertible bond market, 16 industries rose, with the top three industries with the largest increases being medicine and biology (+1.31%), national defense and military industry (+1.26%), and building materials (+1.11%); the top three industries with the largest declines were non - bank finance (-2.09%), steel (-1.81%), and communication (-1.70%) [3]. Summary by Relevant Catalogs I. Market Main Index Performance - The CSI Convertible Bond Index closed at 483.43, up 0.06% day - on - day, 0.07% in the past week, down 1.49% in the past month, and up 16.61% since the beginning of 2025 [7]. - The Convertible Bond Equal - Weighted Index closed at 234.78, up 0.28% day - on - day, down 0.11% in the past week, down 1.09% in the past month, and up 20.73% since the beginning of 2025 [7]. - The Shanghai Composite Index closed at 3876.37, up 0.16% day - on - day, down 0.62% in the past week, down 2.41% in the past month, and up 15.65% since the beginning of 2025 [7]. - The Shenzhen Component Index closed at 13053.97, down 1.29% day - on - day, down 1.97% in the past week, down 1.12% in the past month, and up 25.34% since the beginning of 2025 [7]. - The ChiNext Index closed at 3107.06, down 2.17% day - on - day, down 3.18% in the past week, up 0.06% in the past month, and up 45.08% since the beginning of 2025 [7]. II. Market Fund Performance - The trading volume of the convertible bond market was 63.906 billion yuan, up 3.43% month - on - month; the total trading volume of the Wind All - A Index was 1.676801 trillion yuan, down 8.59% month - on - month. The net outflow of the main funds from the Shanghai and Shenzhen stock markets was 29.167 billion yuan, and the yield of the 10 - year treasury bond rose 0.16 bp to 1.84% [1][9]. III. Convertible Bond Price and Valuation - The overall weighted average closing price of convertible bonds was 132.37 yuan, with no change from the previous day. The closing price of equity - biased convertible bonds was 195.15 yuan, down 0.62%; the closing price of bond - biased convertible bonds was 119.36 yuan, up 0.35%; the closing price of balanced convertible bonds was 129.03 yuan, with no change [2]. - The proportion of high - price bonds above 130 yuan was 53.89%, up 1.55 pct from the previous day. The proportion of bonds in the 120 - 130 (including 130) range decreased by 1.55 pct to 32.38%. The price median was 130.90 yuan, up 0.40% from the previous day [2]. - The 100 - yuan par - value fitted conversion premium rate was 32.29%, down 1.16 pct from the previous day; the overall weighted par value was 98.74 yuan, up 0.28% from the previous day. The premium rate of equity - biased convertible bonds was 15.62%, up 0.67 pct; the premium rate of bond - biased convertible bonds was 85.17%, up 0.35 pct; the premium rate of balanced convertible bonds was 26.46%, down 0.87 pct [2]. IV. Industry Performance - In the A - share market, 18 industries declined. The top three industries with the largest declines were power equipment (-2.22%), communication (-1.58%), and electronics (-1.51%); the top three industries with the largest increases were banks (+1.97%), coal (+1.89%), and petroleum and petrochemicals (+1.25%) [3]. - In the convertible bond market, 16 industries rose. The top three industries with the largest increases were medicine and biology (+1.31%), national defense and military industry (+1.26%), and building materials (+1.11%); the top three industries with the largest declines were non - bank finance (-2.09%), steel (-1.81%), and communication (-1.70%) [3]. - In terms of closing prices, large - cycle industries rose 0.02%, manufacturing industries fell 0.10%, technology industries rose 0.03%, large - consumption industries rose 0.18%, and large - finance industries fell 0.92% [3]. - In terms of conversion premium rates, large - cycle industries decreased by 0.44 pct, manufacturing industries increased by 0.046 pct, technology industries decreased by 0.81 pct, large - consumption industries decreased by 0.78 pct, and large - finance industries decreased by 0.71 pct [3]. - In terms of conversion values, large - cycle industries rose 0.39%, manufacturing industries fell 0.13%, technology industries rose 0.33%, large - consumption industries rose 0.52%, and large - finance industries fell 0.40% [3]. - In terms of pure - bond premium rates, large - cycle industries increased by 0.022 pct, manufacturing industries decreased by 0.08 pct, technology industries decreased by 0.018 pct, large - consumption industries increased by 0.22 pct, and large - finance industries decreased by 1.1 pct [4]. V. Industry Rotation - The banking, coal, and petroleum and petrochemical industries led the rise. The daily increase rates of the banking, coal, and petroleum and petrochemical industries in the stock market were 1.97%, 1.89%, and 1.25% respectively; the daily increase rates in the convertible bond market were 0.33%, 0.16%, and 0.04% respectively [59].

Summary of Conference Call Notes Industry Overview - The notes primarily focus on the convertible bond market in China, particularly for the year 2025 and outlook for 2026. The performance of various sectors, including new energy, chemicals, and metals, is highlighted. Key Points and Arguments 2025 Market Performance - The A-share market experienced phased fluctuations in 2025, with small-cap stocks outperforming the CSI 300 index. The China Convertible Bond Index rose nearly 20%, comparable to the CSI 300's performance [1][3]. - The convertible bond market saw a significant valuation increase, with median prices maintaining historical highs. Approximately 400-500 convertible bonds appreciated throughout the year [1][5]. - The supply of convertible bonds was weak, with new issuance slightly above the previous year but still at historical lows. The total net reduction exceeded 150 billion, with AAA-rated bonds accounting for over 100 billion [1][6][7]. Demand Dynamics - Demand for convertible bonds increased, with rapid growth in convertible bond ETFs and significant accumulation by public funds. However, insurance institutions reduced their holdings [1][7]. - The market is expected to face a tight balance between supply and demand in 2026, with a high maturity scale but new issuance plans accelerating [1][8]. Economic Outlook for 2026 - The global economy is anticipated to show resilience in external demand, with macro policies expected to stimulate consumption. Fixed asset investment and manufacturing growth may improve, enhancing macroeconomic visibility [1][10][11][12]. - The domestic demand is expected to lead economic growth, with policies promoting consumption anticipated to take effect in 2026 [1][11]. Sector-Specific Insights - The convertible bond market is expected to remain optimistic, with a focus on sectors such as new energy, chemicals, aquaculture, steel, and metals. Small-cap, low-rated, high-priced, and equity-sensitive convertible bonds are recommended [2][14]. - The performance of the convertible bond market in 2026 is likely to mirror the 2015-2016 bull market, driven by limited new supply and upward price trends [1][14]. Investment Strategies - Suggested strategies include focusing on convertible bonds benefiting from anti-involution policies and those showing performance inflection points, such as in the steel and chemical sectors [1][15]. - Attention should also be given to sectors aligned with the 14th Five-Year Plan, including aerospace, deep-sea technology, and AI-related fields [1][15][16]. Risks and Considerations - The potential for strong redemption risks should be monitored, and strategies that do not rely on strong redemptions are advised [1][14]. Additional Important Content - The notes detail the four phases of market performance in 2025, highlighting the resilience of the convertible bond market during downturns and the significant appreciation during bullish phases [3][4]. - The notes also emphasize the importance of macroeconomic fundamentals in analyzing the equity market, noting the impact of tariff shocks on export growth [1][9].

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - Last week (December 8 - December 12), the A - share market was volatile. Two important meetings boosted market risk appetite, and trading volume increased. AI hardware and commercial aerospace led the gains, while coal and petroleum and petrochemical sectors lagged. The bond market slightly recovered, with the 10 - year Treasury bond yield at 1.84% on Friday, down 0.84bp from the previous week. The convertible bond market had most individual bonds closing lower, with the CSI Convertible Bond Index up 0.20% for the week, the median price up 0.10%, and the calculated arithmetic average parity down 0.35%. The overall conversion premium rate increased by 2.20% compared to the previous week [1][6][7]. - Some issuers showed a strong willingness to convert. The convertible bond market followed the stock market's volatility last week. Despite the significant adjustment of the micro - cap stock index, the CSI Convertible Bond Index closed slightly higher, showing strong resilience and improved trading volume. Several issuers of near - maturing convertible bonds proposed downward revisions, and the pricing after the proposed downward revisions varied based on the remaining term and industry fundamentals [2][15]. - Looking ahead, with the end - of - year important meetings and the Fed's rate cut settled, the market will enter a policy vacuum period. Relative return investors are advised to make small - position balanced allocations of non - redeemable and appropriately - priced equity - biased convertible bonds in sectors such as power, storage, semiconductor equipment and materials for domestic substitution, commercial aerospace, and humanoid robots. Absolute return investors should focus on high - volatility stocks under 130 yuan or industry leaders with historically low valuations in sectors like two - wheeled vehicles, cosmetics, and breeding [2][15]. 3. Summaries by Related Catalogs Market Focus (December 8 - December 12) Stock Market - A - shares were volatile. The trading volume exceeded 2 trillion on Monday and Friday. The Shanghai Composite Index rose 0.54% on Monday, fell 0.37% on Tuesday, fell 0.23% on Wednesday, fell 0.7% on Thursday, and rose 0.41% on Friday. The Shenzhen Component Index rose 1.39% on Monday, fell 0.39% on Tuesday, rose 0.29% on Wednesday, fell 1.27% on Thursday, and rose 0.84% on Friday. The ChiNext Index rose 2.6% on Monday, rose 0.61% on Tuesday, fell 0.02% on Wednesday, fell 1.41% on Thursday, and rose 0.97% on Friday [1][6]. - Most Shenwan primary industries closed lower. Communication (6.27%), national defense and military industry (2.80%), electronics (2.63%), machinery and equipment (1.38%), and power equipment (1.19%) led the gains, while coal (-3.64%), petroleum and petrochemical (-3.52%), steel (-2.89%), and real estate (-2.62%) lagged [7]. Bond Market - After the Politburo meeting and the Central Economic Work Conference, the moderately loose monetary policy remained unchanged, and inflation data showed a continued price improvement trend. The bond market slightly recovered, with the 10 - year Treasury bond yield at 1.84% on Friday, down 0.84bp from the previous week [1][7]. Convertible Bond Market - Most individual convertible bonds closed lower. The CSI Convertible Bond Index rose 0.20% for the week, the median price rose 0.10%, and the arithmetic average parity fell 0.35%. The overall conversion premium rate increased by 2.20%. The arithmetic average conversion premium rates of convertible bonds with parities in [90,100), [100,110), and [110,120) changed by +2.09%, -1.73%, and +0.20%, respectively, and were at the 94%, 96%, and 89% quantiles since 2023 [1][7]. - Most convertible bond industries closed lower. Building materials (+6.14%), national defense and military industry (+4.27%), power equipment (+1.25%), and beauty care (+0.94%) led the gains, while social services (-2.32%), coal (-2.12%), commercial and retail (-1.52%), and basic chemicals (-1.31%) lagged [8]. - The top - rising individual convertible bonds were Zai 22 (commercial aerospace), Huamao (computing power), Weidao (semiconductor equipment), Jize (green alcohol), and Hangyu (commercial aerospace). The top - falling individual convertible bonds were Yingbo (low - altitude economy & announced strong redemption), Hongtu (satellite application), Huarui (CNC cutting tools), Sanfang (polyester chips), and Yake (automobile aluminum) [1][10]. - The total trading volume of the convertible bond market last week was 285.692 billion yuan, with an average daily trading volume of 57.138 billion yuan, an increase from the previous week [13]. Valuation - As of December 12, 2025, for equity - biased convertible bonds, the average conversion premium rates for parities in the ranges of 80 - 90 yuan, 90 - 100 yuan, 100 - 110 yuan, 110 - 120 yuan, 120 - 130 yuan, and above 130 yuan were 45.18%, 34.97%, 27.88%, 20.1%, 10.88%, and 13.62%, respectively, at the 94%/90%, 94%/95%, 94%/95%, 91%/90%, 70%/53%, and 97%/98% quantiles since 2010/2021. - For debt - biased convertible bonds, the average YTM for parities below 70 yuan was -3.48%, at the 2%/6% quantiles since 2010/2021. - The average implied volatility of all convertible bonds was 43.46%, at the 88%/91% quantiles since 2010/2021. The difference between the convertible bond's implied volatility and the stock's long - term actual volatility was 2.31%, at the 84%/85% quantiles since 2010/2021 [16]. Primary Market Tracking New Issuance and Listing - Last week (December 8 - December 12), Aohong, Shenyu, Tianzhun, and Dingjie convertible bonds announced issuance, while Maolai and Ruike convertible bonds were listed. - Aohong Convertible Bond (111024.SH): The underlying stock is Aohong Electronics (605058.SH), in the electronics industry. The issuance scale is 580 million yuan, with a credit rating of AA -. The funds will be used for the construction of a production base in Thailand [23]. - Shenyu Convertible Bond (123262.SZ): The underlying stock is Shenyu Co., Ltd. (300563.SZ), in the communication industry. The issuance scale is 500 million yuan, with a credit rating of AA -. The funds will be used for the construction of data lines in the intelligent field [24]. - Tianzhun Convertible Bond (118062.SH): The underlying stock is Tianzhun Technology (688003.SH), in the machinery and equipment industry. The issuance scale is 872 million yuan, with a credit rating of AA -. The funds will be used for R & D and industrialization projects in industrial vision equipment, semiconductor metrology equipment, and intelligent driving and embodied intelligent controllers [25][26]. - Dingjie Convertible Bond (123263.SZ): The underlying stock is Dingjie Digital Intelligence (300378.SZ), in the computer industry. The issuance scale is 828 million yuan, with a credit rating of AA. The funds will be used for the Dingjie Digital Intelligence Ecological Empowerment Platform project and to supplement working capital [27]. - Maolai Convertible Bond (118061.SH): The underlying stock is Maolai Optics (688502.SH), in the electronics industry. The issuance scale is 563 million yuan, with a credit rating of A+. The funds will be used for ultra - precision optical production and processing projects, ultra - precision optical technology R & D centers, and to supplement working capital [28]. - Ruike Convertible Bond (118060.SH): The underlying stock is Ruike Da (688800.SH), in the electronics industry. The issuance scale is 1 billion yuan, with a credit rating of AA -. The funds will be used for the renovation and upgrade of high - frequency and high - speed connection systems, intelligent energy connection systems, and to supplement working capital [29]. Future Issuance and Listing - As of December 12, there were no announcements of convertible bond issuances or listings for the next week (December 15 - December 19). - Last week, one company (Shuangle Co., Ltd.) was approved for registration, two companies (Tonglian Precision and Xianghe Industry) passed the listing committee review, three companies (Suzhou Tianmai, Baoti Co., Ltd., and Zhongqi Co., Ltd.) were accepted by the exchange, and two companies (Hubei Yihua and Zhaomin Technology) passed the shareholders' meeting. There were no new board - proposed enterprises. - As of now, there are 92 convertible bonds waiting to be issued, with a total scale of 146.43 billion yuan, including 3 approved for registration with a total scale of 2.5 billion yuan and 9 that have passed the listing committee review with a total scale of 9.99 billion yuan [30].

1. Report Industry Investment Rating No information provided in the content. 2. Core View of the Report - The convertible bond market rose slightly this week, and the equity market also had a small increase. Given the current volatility in the equity market, high - price and high - valuation convertible bonds may face adjustment pressure, and trading convertible bonds is difficult. It is recommended to comprehensively consider convertible bond terms and underlying stock conditions, select bonds carefully, and focus on structural opportunities and new bonds in high - prosperity industries [4]. 3. Summary by Relevant Catalogs Market行情 - From December 1, 2025, to December 5, 2025 (5 trading days), the CSI Convertible Bond Index rose by +0.08% (last week's change was -0.27%), and the CSI All - Share Index changed by +0.77% (last week's change was +2.82%). Since 2025, the CSI Convertible Bond Index has risen by +16.27%, and the CSI All - Share Index has risen by +21.60% [1]. - By rating, high - rated bonds (AAA), medium - high - rated bonds (AA+), medium - rated bonds (AA), medium - low - rated bonds (AA -), and low - rated bonds (AA - and below) had weekly changes of +0.09%, -0.26%, -0.89%, -1.17%, and -1.31% respectively, with all but high - rated bonds declining [1]. - By convertible bond size, large - scale convertible bonds (bond balance > 2 billion yuan), medium - large - scale convertible bonds (balance between 1.5 and 2 billion yuan), medium - scale convertible bonds (balance between 1 and 1.5 billion yuan), small - medium - scale convertible bonds (balance between 0.5 and 1 billion yuan), and small - scale convertible bonds (balance < 0.5 billion yuan) had weekly changes of -0.93%, -0.57%, +0.46%, -0.90%, and -1.37% respectively, with all but medium - scale convertible bonds declining [2]. - By conversion parity, ultra - high - parity bonds (conversion value > 130 yuan), high - parity bonds (conversion value between 120 and 130 yuan), medium - high - parity bonds (conversion value between 110 and 120 yuan), medium - parity bonds (conversion value between 100 and 110 yuan), medium - low - parity bonds (conversion value between 90 and 100 yuan), low - parity bonds (conversion value between 80 and 90 yuan), and ultra - low - parity bonds (conversion value < 80 yuan) had weekly changes of -2.74%, -1.23%, -1.67%, +0.11%, -0.89%, -1.31%, and -0.30% respectively, with all but medium - parity bonds declining [2]. Convertible Bond Price, Parity, and Conversion Premium Rate - As of December 5, 2025, there were 407 outstanding convertible bonds (410 at the end of last week), with a balance of 556.996 billion yuan (561.091 billion yuan at the end of last week). The average convertible bond price was 129.56 yuan (130.12 yuan at the end of last week), with a percentile of 90.38% (from the beginning of 2023 to December 5, 2025). The average convertible bond parity was 100.82 yuan (100.90 yuan at the end of last week), with a percentile of 87.69%. The average convertible bond conversion premium rate was 30.76% (30.39% at the end of last week), with a percentile of 34.51% [3]. Convertible Bond Performance and Allocation Direction - Given the current situation, it is recommended to comprehensively judge based on convertible bond terms and underlying stock conditions, select bonds carefully, and focus on structural opportunities and new bonds in high - prosperity industries [4]. Convertible Bond Increase Situation - The top 15 convertible bonds in terms of weekly increase are listed, including YaKe Convertible Bond, WeiDao Convertible Bond, etc., along with their underlying stocks, industries, latest closing prices, convertible bond increases, and underlying stock increases [20].

1. Report Industry Investment Rating No information provided in the report regarding the industry investment rating. 2. Core Viewpoints of the Report - On December 1, the convertible bond market showed a trend of increasing in price with decreasing trading volume, and the valuation increased compared to the previous period. The CSI Convertible Bond Index rose by 0.10%, while the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, Shanghai 50 Index, and CSI 1000 Index all increased to varying degrees [1]. - The market style favored large - cap growth stocks. Large - cap growth stocks rose by 1.42%, outperforming other styles [1]. - The trading sentiment in the convertible bond market weakened. The trading volume of the convertible bond market was 5.3624 billion yuan, a decrease of 9.67% compared to the previous day, while the total trading volume of the Wind All - A Index was 188.9449 billion yuan, an increase of 18.26% [1]. 3. Summary According to Relevant Catalogs Market Main Index Performance - The CSI Convertible Bond Index closed at 482.09, up 0.10% for the day, down 0.18% for the week, down 0.49% for the month, and up 16.29% since the beginning of 2025. Other convertible bond - related indices also showed different degrees of increase or decrease [7]. - Among the A - share indices, the Shanghai Composite Index closed at 3914.01, up 0.65% for the day; the Shenzhen Component Index closed at 13146.72, up 1.25% for the day; the ChiNext Index closed at 3092.50, up 1.31% for the day [7]. Market Capital Performance - The trading volume of the convertible bond market was 5.3624 billion yuan, a decrease of 9.67% compared to the previous day, while the total trading volume of the Wind All - A Index was 188.9449 billion yuan, an increase of 18.26% [1][8]. - The net outflow of the main funds in the Shanghai and Shenzhen stock markets was 343 million yuan, and the yield of the 10 - year Treasury bond decreased by 0.46bp to 1.84% [1][11][12]. Convertible Bond Price and Valuation - The weighted average closing price of convertible bonds increased to 132.54 yuan, up 0.08% compared to the previous day. The proportion of high - price bonds above 130 yuan increased by 0.51pct to 54.55% [2]. - The fitting conversion premium rate of 100 - yuan par value increased to 31.50%, up 0.04pct compared to the previous day. The overall weighted par value increased by 0.61% to 100.63 yuan [2][17][22]. Industry Performance - In the A - share market, the top three industries in terms of gains were non - ferrous metals (+2.85%), communication (+2.81%), and electronics (+1.58%); the top three industries in terms of losses were agriculture, forestry, animal husbandry and fishery (-0.43%), environmental protection (-0.23%), and real estate (-0.06%) [3]. - In the convertible bond market, the top three industries in terms of losses were environmental protection (-3.58%), steel (-1.37%), and household appliances (-1.01%); the top three industries in terms of gains were communication (+0.85%), electronics (+0.82%), and coal (+0.66%) [3]. ETF Share Changes - The share of Bosera Convertible Bond ETF was 4.237 billion shares, with a net decrease of 27.9 million shares [37]. - The share of Haifutong Convertible Bond ETF was 802 million shares, with a net increase of 10.1 million shares [40].

Summary of the Conference Call on Convertible Bond Strategy for 2026 Industry Overview - The conference call focuses on the convertible bond market in China, particularly the performance and outlook for 2026, influenced by macroeconomic factors and policy changes [1][3][8]. Key Points and Arguments Market Performance and Characteristics - The convertible bond market showed strong performance in 2025, with a cumulative increase of approximately 16.5% by the end of November [3]. - High-rated large-cap convertible bonds saw a rapid decline in scale due to tightened refinancing policies since 2024, particularly affecting bank convertible bonds [3][6]. - The rapid increase in ETF scale, reaching 620.682 billion, accounted for 12.5% of the convertible bond market, growing over 50% since the beginning of the year [1][5]. - The valuation of convertible bonds is increasingly aligned with the stock market, indicating a shift towards equity-like characteristics [1][3]. Future Supply and Demand Dynamics - Supply pressure in the convertible bond market is expected to persist into 2026, with a significant reduction in issuance anticipated due to strong redemption and delisting pressures [1][6][10]. - Despite the anticipated supply challenges, there is a strong willingness among major shareholders to issue new bonds due to lower financing costs [6][10]. - The demand for fixed-income products is expected to support valuations, preventing significant declines despite the shrinking supply [7][10]. Economic Outlook - The outlook for the A-share market in 2026 is optimistic, driven by expectations of economic recovery, structural adjustments, and policy reforms [8][9]. - Low-risk interest rates are likely to encourage a shift of savings and long-term capital into the equity market, enhancing the attractiveness of equity assets [9]. Investment Strategies for 2026 - Investment strategies should focus on two main opportunities: low-priced convertible bonds as a stabilizing asset and flexible equity-linked convertible bonds [11][14]. - Specific sectors to watch include technology growth (AI, humanoid robots), green energy (energy storage, hydrogen), and defensive positions in banking and public utilities [3][18]. - The strategy should involve active selection of bonds that are less likely to trigger strong redemption and those with a solid underlying stock logic [12][20]. Risks and Considerations - The potential for strong redemption events remains high, necessitating caution with high-priced and high-premium bonds that may trigger such actions [12][20]. - The shrinking scale of the convertible bond market may lead to capital inflows into the stock market, which could compress time value [2][10]. Conclusion - The convertible bond market in 2026 is expected to maintain high valuations supported by favorable policies and low-interest rates, despite challenges in supply and potential strong redemption pressures [10][14]. - A balanced approach with a focus on both defensive and flexible investment strategies will be crucial for navigating the market dynamics in the coming year [11][14].

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report On November 28, 2025, the convertible bond market showed incremental growth and an increase in valuation. Small - cap growth stocks had an advantage in the market style, and the trading sentiment in the convertible bond market heated up. Most industries in the underlying stocks and convertible bonds rose [1]. 3. Summary by Relevant Catalogs 3.1 Market Main Index Performance - Index performance: The CSI Convertible Bond Index rose 0.68% month - on - month, the Shanghai Composite Index rose 0.34%, the Shenzhen Component Index rose 0.85%, the ChiNext Index rose 0.70%, the SSE 50 Index fell 0.09%, and the CSI 1000 Index rose 1.06%. From the perspective of style indices, small - cap growth stocks were relatively dominant, with small - cap growth rising 1.67% [1][7]. 3.2 Market Fund Performance - Trading volume: The trading volume of the convertible bond market was 5.9368 billion yuan, a month - on - month increase of 19.84%; the total trading volume of the Wind All - A Index was 159.7731 billion yuan, a month - on - month decrease of 7.28%. The net inflow of main funds in the Shanghai and Shenzhen stock markets was 682.5 million yuan, and the yield of the 10 - year treasury bond decreased by 1.25bp month - on - month to 1.84% [1][8]. 3.3 Convertible Bond Valuation - Bond price: The weighted average closing price of convertible bonds was 132.44 yuan, a 0.87% increase from the previous day. The proportion of high - price bonds above 130 yuan was 54.04%, a 2.28 - percentage - point increase from the previous day. The price median was 130.74 yuan, a 0.55% increase from the previous day [2]. - Valuation: The fitted conversion premium rate of 100 - yuan par value was 31.35%, a 0.44 - percentage - point increase from the previous day. The overall weighted par value was 100.04 yuan, a 0.91% increase from the previous day. The premium rates of all types of convertible bonds increased [2]. 3.4 Industry Rotation - Underlying stock industry: 28 industries in the A - share market rose, with the top three gainers being steel (+1.59%), agriculture, forestry, animal husbandry and fishery (+1.59%), and commerce and retail (+1.46%); only two industries fell, namely banking (-0.83%) and coal (-0.14%) [3]. - Convertible bond industry: All convertible bond industries rose, with the top three gainers being steel (+4.81%), building materials (+4.56%), and power equipment (+2.70%) [3]. - Different sectors: In terms of closing price, large - cycle rose 1.60%, manufacturing rose 1.28%, technology rose 0.62%, large - consumption rose 0.57%, and large - finance rose 0.32%. In terms of conversion premium rate, large - cycle decreased by 0.087 percentage points, manufacturing decreased by 0.3 percentage points, technology decreased by 0.36 percentage points, large - consumption increased by 0.016 percentage points, and large - finance increased by 1.3 percentage points [3].