Market Overview - The China Convertible Bond Index increased by 2.3% during the week of August 4 to August 8, 2025, following a slight adjustment the previous week, while the China All Share Index rose by 1.9% [6] - Year-to-date, the China Convertible Bond Index has gained 12.8%, outperforming the China All Share Index, which has increased by 10.7% [6][9] - Current valuations of convertible bonds are near or exceed historical highs, yet the equity market remains vibrant, suggesting a positive outlook for convertible bonds [6][10] Performance by Rating and Size - High-rated bonds (AA+ and above), medium-rated bonds (AA), and low-rated bonds (AA- and below) saw weekly changes of +2.14%, +2.26%, and +3.01% respectively, with low-rated bonds showing the highest increase [7] - In terms of bond size, large-scale bonds (over 5 billion) increased by +1.49%, medium-scale bonds (between 500 million and 5 billion) by +2.38%, and small-scale bonds (under 500 million) by +3.23%, with small-scale bonds again leading in growth [7] Price and Valuation Metrics - The average price of convertible bonds reached 130.4 yuan, up from 127.7 yuan the previous week, with a percentile rank of 99.5% [8] - The average conversion price was 103.18 yuan, an increase from 100.65 yuan, with a percentile rank of 93.5% [8] - The average conversion premium stood at 28.1%, up from 27.4% the previous week, with a percentile rank of 56.7% [8] Sector Performance - The top 30 performing convertible bonds were primarily from the machinery equipment (7 bonds) and chemical (6 bonds) sectors, while the worst performers were mainly from the pharmaceutical and biological (7 bonds) and chemical (4 bonds) sectors [7]

Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core View of the Report - The current convertible bond valuations are close to or exceed historical highs, but the equity market is on the rise, so one can still be optimistic about convertible bonds [1][4] Group 3: Summary by Relevant Catalogs Market Conditions - From August 4 to August 8, 2025, the CSI Convertible Bond Index rose by +2.3% (last week's change was -1.4%), and the CSI All-Share Index changed by +1.9% (last week's change was -1.1%). Since the beginning of 2025, the CSI Convertible Bond Index has risen by +12.8%, and the CSI All-Share Index has risen by +10.7%, with the convertible bond market outperforming the equity market [1][4] - By rating, high-rated bonds (AA+ and above), medium-rated bonds (AA), and low-rated bonds (AA- and below) rose by +2.14%, +2.26%, and +3.01% respectively this week, with low-rated bonds having the highest increase. By convertible bond size, large-scale convertible bonds (bond balance > 5 billion yuan), medium-scale convertible bonds (balance between 500 million and 5 billion yuan), and small-scale convertible bonds (balance < 500 million yuan) rose by +1.49%, +2.38%, and +3.23% respectively, with small-scale convertible bonds having the highest increase. By parity, ultra-high parity bonds (conversion value > 130 yuan), high parity bonds (conversion value between 110 and 130 yuan), medium parity bonds (conversion value between 90 and 110 yuan), low parity bonds (conversion value between 70 and 90 yuan), and ultra-low parity bonds (conversion value < 70 yuan) rose by +4.08%, +2.85%, +2.30%, +1.96%, and +1.86% respectively, with ultra-high parity bonds having the highest increase [2] - The top 30 convertible bonds in terms of increase are mainly from the machinery and equipment (7) and chemical (6) industries; the top 30 convertible bonds in terms of decline are mainly from the pharmaceutical and biological (7) and chemical (4) industries [2] Convertible Bond Price, Parity, and Conversion Premium Rate - As of August 8, 2025, there were 461 outstanding convertible bonds (463 at the end of last week), with a balance of 631.809 billion yuan (636.614 billion yuan at the end of last week). The average convertible bond price was 130.4 yuan (127.7 yuan last week), with a percentile of 99.5%; the average convertible bond parity was 103.18 yuan (100.65 yuan last week), with a percentile of 93.5%; the average convertible bond conversion premium rate was 28.1% (27.4% last week), with a percentile of 56.7%. Among them, the conversion premium rate of medium-parity convertible bonds (conversion value between 90 and 110 yuan) was 29.6% (27.6% last week), higher than the median conversion premium rate of medium-parity convertible bonds since 2018 (20.1%) [3] Convertible Bond Performance and Allocation Direction - The CSI Convertible Bond Index rose by +2.3% this week, continuing to rise after a slight adjustment last week; the CSI All-Share Index changed by +1.9%. Since the beginning of 2025, the CSI Convertible Bond Index has risen by +12.8%, and the CSI All-Share Index has risen by +10.7%, with the convertible bond market outperforming the equity market. Although the current convertible bond valuations are high, one can still be optimistic about convertible bonds due to the promising equity market [4] Convertible Bond Increase Situation - The top 15 convertible bonds in terms of increase this week include Jiejian Convertible Bond, Julong Convertible Bond, and Gaoce Convertible Bond, with increases of 23.15%, 21.65%, and 16.82% respectively [22]

1. Report's Investment Rating for the Industry The document does not mention the industry investment rating. 2. Core Viewpoints of the Report - The convertible bond market has a reasonable correction, and the bullish logic remains unchanged. Although there are concerns about high valuations and profit - taking emotions, there is no need for excessive worry. The convertible bond still has upward potential, and it can be appropriately bought at lower prices if the price continues to decline [5][8]. - The equity market is expected to be relatively certain before September. The valuation and pricing of convertible bonds are supported by the increasing demand for fixed - income plus products and the relatively low convertible bond positions. The upward channel of the market is clear, driven by the improvement of grass - roots governance capabilities and technological competitiveness [5][8]. 3. Summary According to the Directory 3.1 Convertible Bond Viewpoint: Convertible Bonds Have a Reasonable Correction, and the Bullish Logic Remains Unchanged - The convertible bond market has risen continuously in the past few weeks under the drive of the underlying stocks, and the valuation has continued to soar. The short - term fluctuations in the equity market have become an outlet for the market sentiment. However, there is no need to be overly concerned [5][8]. - The equity market reached 3636 points this week and then showed some fear of high prices, closing at 3560 points. The market heat has not decreased, and trading volume and margin trading remain high. Domestic meetings and Sino - US tariff negotiations have no unexpected content. The market is still bullish in the future [5][8]. - After 5 consecutive weeks of rising, the market reached a high and then declined this week. The convertible bonds fell significantly, with the average daily trading volume slightly decreasing to 77.217 billion yuan. The CSI Convertible Bond Index dropped 1.37%, the parity center dropped 1.1% to 105.8 yuan, and the conversion premium rate center dropped 0.3% to 21.8% [5]. 3.2 Convertible Bond Review: Convertible Bonds Significantly Corrected with the Underlying Stocks 3.2.1 Overall Market Performance: The Stock Market Reached a High and Then Declined, and the Convertible Bond Valuation Significantly Decreased - From July 28th to August 1st, after 5 consecutive weeks of upward movement, the equity market corrected. The Shanghai Composite Index fell 0.94%, the Shenzhen Component Index fell 1.58%, the CSI 300 fell 1.75%, the CSI 1000 fell 0.54%, the ChiNext Index fell 0.74%, the STAR 50 fell 1.65%, and the Beijing Stock Exchange 50 fell 2.70%. In terms of industries, medicine, biology, communication, and media led the gains, while coal, non - ferrous metals, and real estate led the losses. The average daily trading volume decreased slightly by 332.89 billion to 1.81 trillion yuan [13]. - The top ten convertible bonds in terms of gains last week were Qizheng, Dongjie, Tianlu, Jing 23, Haibo, Weixin, Titan, Huicheng, Taifu, and Songlin Convertible Bonds. In terms of trading volume, Tianlu, Saili, Dayu, Qizheng, Jing 23, Borui, Dongjie, Yingji, Sheyan, and Huicheng Convertible Bonds were relatively active [13]. 3.2.2 Slight Reduction in Trading Volume, Smaller Declines in High - priced, Medium - and Low - Rated Convertible Bonds - After 5 consecutive weeks of rising, the market reached a high and then declined this week. Convertible bonds fell significantly, and the average daily trading volume slightly decreased to 77.217 billion yuan. The CSI Convertible Bond Index dropped 1.37%, the parity center dropped 1.1% to 105.8 yuan, and the conversion premium rate center dropped 0.3% to 21.8%. In terms of style, high - priced, medium - and low - rated convertible bonds had smaller declines this week, while medium - and high - rated, large - cap, and low - priced convertible bonds had larger declines [5][15].

Group 1 - The convertible bond market continues to see rising valuations, with prices reaching new highs, supported by strong demand in the fixed income market and low positions in convertible bonds [5][8][19] - The absolute price median of convertible bonds has reached 128 yuan, indicating a significant increase in valuation levels [8][19] - The market sentiment is bolstered by various events, including the commencement of construction on the Yashan Hydropower Station and the AI conference, which have strengthened bullish expectations [8][11] Group 2 - From July 21 to July 25, the equity market experienced a continuous upward trend, with the Shanghai Composite Index rising by 1.67% and the ChiNext Index increasing by 2.67% [11] - The average daily trading volume increased significantly to 1.84 trillion yuan, indicating heightened market activity [11] - The trading volume of convertible bonds reached 80.674 billion yuan, with the China Convertible Bond Index rising by 2.14% [19][29] Group 3 - The report suggests that the systemic risk for convertible bonds remains low, with a strong expectation for performance until September [5][8] - The report recommends focusing on low-priced and equity-oriented individual bonds, as the difficulty in selecting bonds increases under the current price structure [5][19] - The report highlights that high-priced and mid-high rated convertible bonds performed well, while AAA-rated and large-cap bonds showed relative weakness [19]

1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - The high price and high valuation of convertible bonds have certain logical support from aspects such as bond floor and institutional behavior [3][7]. - The thick bond floor of convertible bonds currently may lead to an upward breakthrough in the average price as the stock market rises, and the existence of call - risk may cause the valuation and price of non - called convertible bonds to become more expensive [3][7]. - The option value of debt - like convertible bonds has increased, and their high - price and high - valuation state may be maintained, with the YTM possibly dropping to a very low level [3][7]. - As the equity market continues to strengthen and funds flow into equity - related assets, convertible bonds have become a tool for fixed - income plus funds to capture the beta of the equity market. If secondary bond funds replace primary bond funds as the marginal incremental form of fixed - income plus funds flowing into the market, the capital inflow into the convertible bond market may continue to increase [3][7]. - The average remaining term of the convertible bond market is gradually shortening, indicating an increase in both call and downward - revision probabilities. The high price of short - term debt - like convertible bonds currently contains a strong downward - revision expectation [3][7]. 3. Summary by Relevant Catalogs 3.1 Weekly Viewpoint and Outlook - The high price and high valuation of convertible bonds are supported by four clues, including the thick bond floor, the increase in the option value of debt - like convertible bonds, the strengthening of the equity market and the inflow of funds, and the shortening of the average remaining term of the convertible bond market [3][7]. 3.2 Convertible Bond Valuation - This week, the sentiment of convertible bonds and underlying stocks remained positive, with both rising significantly. The 100 - yuan valuation continued to rise unilaterally, and convertible bonds had a strong ability to follow the rise of underlying stocks [6][8]. - The overall market convertible bond 100 - yuan premium rate was 33%, rising by 1.14% in a single week, and the latest quantile level was at the 89.90% percentile since 2017. There was an obvious differentiation in the valuation of high - and low - rated convertible bonds, with the valuation of low - rated convertible bonds rising more [6][8]. - This week, convertible bonds continued to rise significantly following the underlying stocks, and the yield to maturity reached a new low since 2017, reporting - 5.09%. As of the latest, the conversion premium rate index, pure - bond premium rate index, and yield to maturity were 41.94%, 37.06%, and - 5.09% respectively, changing by - 1.31%, + 3.02%, and - 0.70% compared with last week, and their current quantile levels were at the 61.90, 62.70, and 0.00 percentiles since 2017 [6][10]. 3.3 Clause Tracking 3.3.1 Redemption - This week, convertible bonds such as Yingji, Chujiang, and Liancheng issued early redemption announcements. Currently, there are 22 convertible bonds that have issued call or maturity redemption announcements but have not yet delisted, and the potential conversion or maturity balance of call and maturity convertible bonds among those not delisted is 5 billion yuan [6][14]. - There are currently 52 convertible bonds in the redemption process, 14 of which are expected to meet the redemption conditions next week. Also, 4 convertible bonds issued non - redemption announcements this week [14][17][19]. 3.3.2 Downward Revision - This week, Zhongzhuangzhuan 2 and Jinneng convertible bonds proposed downward revisions, and Jingao convertible bond announced a downward revision to the bottom. As of the latest, 145 convertible bonds are in the non - downward - revision interval, 24 are restricted by net assets and cannot be downward - revised, 1 has triggered the condition but the stock price is still below the downward - revision trigger price without an announcement, 37 are accumulating downward - revision days, and 3 have issued downward - revision board proposals but have not yet held a general meeting of shareholders [6][20][21]. 3.3.3 Put Option - This week, Guowei and Changqi convertible bonds issued put - option announcements. As of the latest, 2 convertible bonds have issued put - option announcements, and 4 are accumulating put - option trigger days, among which 3 are in the non - downward - revision interval and 1 is accumulating downward - revision days [23]. 3.4 Primary Issuance - There were no convertible bond issuance announcements this week. According to the latest announcement, Bo 25 convertible bond is to be listed next week (July 28, 2025). As of the latest, there are 6 convertible bonds in the approval - registration progress with an expected issuance scale of 6.9 billion yuan, and 3 in the listing - committee approval progress with an expected issuance scale of 4 billion yuan [25].

Report Summary 1. Investment Rating of the Reported Industry The provided content does not mention the investment rating of the industry. 2. Core Viewpoints of the Report - At the beginning of the week, the convertible bond market experienced a significant pullback, but sentiment quickly recovered. The convertible bond index reached a new high, and the YTM hit a new low. Small - cap sectors such as technology and innovative drugs led the gains, while bank and photovoltaic convertible bonds were volatile, with bank convertible bonds that had performed well retreating. After a phased adjustment, there may be repair opportunities for bank convertible bonds. The convertible bond market is generally expensive, and after the YTM, the 100 - yuan valuation also broke through strongly this week. There may be short - term upward momentum, but potential adjustment risks need to be guarded against [1][4]. 3. Summaries Based on Relevant Catalogs 3.1 Convertible Bond Valuation - This week, both equities and convertible bonds continued to rise slightly. Convertible bonds had a strong ability to follow the rise of underlying stocks, and the 100 - yuan valuation increased. The market - wide convertible bond 100 - yuan premium rate was 31%, up 0.33% from the previous week, and the latest quantile was at the 86.10% percentile since 2017. There was a slight differentiation in the valuations of high - and low - rated convertible bonds, with low - rated ones being slightly stronger [3][5]. - This week, convertible bonds continued to rise slightly following the underlying stocks. The yield to maturity was approaching a historical low, at - 4.39%. As of the latest data, the conversion premium rate index, pure bond premium rate index, and yield to maturity were 43.25%, 34.04%, and - 4.39% respectively, with changes of - 0.73%, + 1.66%, and - 0.39% from the previous week. Their current quantile levels were at the 63.50, 55.10, and 0.80 percentiles since 2017 [3][10]. 3.2 Clause Tracking 3.2.1 Redemption - This week, Guangda, Beilu, Feilu, Yong'an, Liande convertible bonds, etc. issued early redemption announcements. Currently, there are 21 convertible bonds that have issued early redemption or maturity redemption announcements but have not delisted, and the potential conversion or maturity balance of these bonds is 5.3 billion yuan. There are 43 convertible bonds currently in the redemption process, and 9 are expected to meet the redemption conditions next week. Three convertible bonds issued non - redemption announcements this week [3][15][17]. 3.2.2 Downgrade - This week, Lingkang convertible bond proposed a downgrade, and Shanshi convertible bond announced a downgrade, approaching the maximum downgrade. As of the latest, 152 convertible bonds are in the non - downgrade period, 25 cannot be downgraded due to net asset constraints, 2 have triggered the condition but the stock price is still below the downgrade trigger price without an announcement, 36 are accumulating downgrade days, and 2 have issued board - proposed downgrade plans but have not yet gone to the general meeting of shareholders [3][21]. 3.2.3 Put - back - This week, Longda convertible bond issued a put - back announcement. As of the latest, 2 convertible bonds have issued put - back announcements, and 7 are accumulating put - back trigger days, including 5 in the non - downgrade period and 2 accumulating downgrade days [3][24]. 3.3 Primary Issuance - There were no announcements of convertible bond issuances this week. Next week, Libo convertible bond is scheduled to be listed on July 22, 2025. As of the latest, there are 5 convertible bonds in the approved - registration progress, with a total issuance scale of 5.9 billion yuan, and 2 in the listing - committee - approved progress, with a total issuance scale of 1.5 billion yuan [3][26].

Report Summary 1. Investment Rating of the Industry The provided content does not mention the industry investment rating. 2. Core Views of the Report - The current risks in the convertible bond market include high valuations of low - volatility bond - type convertible bonds and high average market prices, which may lead to a stampede under external risks. If the Shanghai Composite Index fails to break through 3500 points for a long time, it may reverse market sentiment and the convertible bond market may follow suit [5]. - For absolute - return accounts, especially low - volatility bond - type strategy accounts, it is advisable to shift to a defensive position. For relative - return accounts, considering the risk of missing out on potential gains in a liquid market, balanced and equity - biased convertible bonds with previously compressed valuations may offer better value [5]. 3. Summary by Relevant Catalogs 3.1 Weekly Views and Outlook - The convertible bond market faces risks such as high valuations of low - volatility bond - type convertible bonds and high average market prices. The high price level may cause a stampede under external risks. If the Shanghai Composite Index fails to break through 3500 points for a long time, the convertible bond market may reverse [5]. - Absolute - return accounts can shift to defense, while relative - return accounts can consider balanced and equity - biased convertible bonds with previously compressed valuations [5]. 3.2 Convertible Bond Valuation - This week, the equity and convertible bond markets continued to rise, but the growth rate narrowed. The underlying stocks outperformed convertible bonds, and convertible bond valuations increased slightly. The 100 - yuan premium rate of the entire market was 31%, up 0.48% week - on - week, and the latest percentile was at 84.90% since 2017. There was a slight divergence in valuations between high - and low - rated convertible bonds, with low - rated ones being slightly stronger [6]. - Convertible bonds followed the rise of underlying stocks, and the yield to maturity reached a new low this year at - 4.00%. As of the latest data, the conversion premium rate index, pure bond premium rate index, and yield to maturity were 43.98%, 32.38%, and - 4.00% respectively, changing by - 1.30%, + 1.58%, and - 0.30% week - on - week, and their percentile levels since 2017 were 65.00, 51.50, and 2.90 respectively [9][10]. 3.3 Clause Tracking - **Redemption**: This week, Weilong, Quanfeng, Zhite, and Henghui convertible bonds issued early redemption announcements. There are currently 17 convertible bonds that have issued early redemption or maturity redemption announcements but have not yet delisted, with a potential conversion or maturity balance of 6.6 billion yuan. There are 42 convertible bonds currently in the redemption process, and 10 are expected to meet the redemption conditions next week. Three convertible bonds issued non - redemption announcements this week [12][17][19]. - **Downward Revision**: No convertible bonds proposed downward revisions this week. Jiali and Lanfan convertible bonds announced downward revisions, with Jiali's reaching the bottom and Lanfan's not. As of now, 162 convertible bonds are in the non - downward - revision period, 26 cannot be downward - revised due to net asset constraints, 1 has triggered the condition but has not announced, 40 are accumulating downward - revision days, and 2 have issued board proposals for downward revision but have not held a general meeting [20]. - **Put Option**: Lixun convertible bond issued a put option announcement this week. As of now, 6 convertible bonds are accumulating put - option trigger days, 4 of which are in the non - downward - revision period and 2 are accumulating downward - revision days [23]. 3.4 Primary Issuance - This week, Guanghe convertible bond issued an issuance announcement. Next week, Yongxi convertible bond is scheduled to be listed on July 14, 2025. As of now, there are 4 convertible bonds awaiting registration approval with a planned issuance scale of 4.8 billion yuan, and 3 convertible bonds that have passed the listing committee review with a planned issuance scale of 2.6 billion yuan [25].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - On July 11, 2025, most convertible bond industries rose, and the valuation increased month - on - month. The trading sentiment in the convertible bond market weakened [1]. - The convertible bond price center increased, and the proportion of high - price bonds decreased. The convertible bond valuation increased [2]. - In the stock market, more than half of the underlying stock industry indices rose. In the convertible bond market, 22 industries rose [3]. Summary by Directory 1. Market Main Index Performance - The CSI Convertible Bond Index rose 0.03% month - on - month, the Shanghai Composite Index rose 0.01%, the Shenzhen Component Index rose 0.61%, the ChiNext Index rose 0.80%, the SSE 50 Index fell 0.01%, and the CSI 1000 Index rose 0.85% [1]. - Small - cap growth stocks were relatively dominant. The large - cap growth index rose 0.55%, the large - cap value index fell 0.80%, the mid - cap growth index rose 0.28%, the mid - cap value index fell 0.13%, the small - cap growth index rose 0.68%, and the small - cap value index rose 0.18% [1]. 2. Market Fund Performance - The trading volume in the convertible bond market was 66.069 billion yuan, a 1.25% month - on - month decrease. The total trading volume of the Wind All - A Index was 1736.61 billion yuan, a 14.62% month - on - month increase. The net outflow of the main funds in the Shanghai and Shenzhen stock markets was 14.038 billion yuan [1]. - The yield of the 10 - year treasury bond rose 0.37bp month - on - month to 1.67% [1]. 3. Convertible Bond Valuation - After excluding convertible bonds with a closing price > 150 yuan and a conversion premium rate > 50%, the fitted conversion premium rate of 100 - yuan par value was 25.38%, a 0.08pct month - on - month increase. The overall weighted par value was 94.40 yuan, a 0.52% month - on - month decrease [2][21]. - The conversion premium rates of all types of convertible bonds (divided by stock - bond nature) increased. The conversion premium rate of equity - biased convertible bonds rose 1.23pct, that of debt - biased convertible bonds rose 0.39pct, and that of balanced convertible bonds rose 0.34pct [2]. 4. Industry Performance - In the A - share market, the top three rising industries were non - bank finance (+2.02%), computer (+1.93%), and steel (+1.93%); the top three falling industries were bank (-2.41%), building materials (-0.67%), and coal (-0.60%) [3]. - In the convertible bond market, 22 industries rose. The top three rising industries were non - bank finance (+1.97%), computer (+1.09%), and non - ferrous metals (+1.05%); the top three falling industries were bank (-0.72%), textile and apparel (-0.44%), and media (-0.27%) [3]. - In terms of closing price, the large - cycle sector rose 0.81%, the manufacturing sector rose 0.05%, the technology sector fell 0.22%, the large - consumption sector rose 0.12%, and the large - finance sector rose 0.66% [3]. - In terms of conversion premium rate, the large - cycle sector rose 0.45pct, the manufacturing sector rose 0.35pct, the technology sector fell 0.22pct, the large - consumption sector rose 0.31pct, and the large - finance sector rose 1.2pct [3]. - In terms of conversion value, the large - cycle sector rose 0.18%, the manufacturing sector fell 0.18%, the technology sector rose 0.43%, the large - consumption sector rose 0.22%, and the large - finance sector rose 0.71% [3]. - In terms of pure - bond premium rate, the large - cycle sector rose 0.53pct, the manufacturing sector rose 0.15pct, the technology sector rose 0.59pct, the large - consumption sector rose 0.13pct, and the large - finance sector rose 0.71pct [4]. 5. Industry Rotation - Non - bank finance, computer, and steel led the rise. The daily increase of non - bank finance in the underlying stock market was 2.02%, and 1.97% in the convertible bond market; the daily increase of computer was 1.93% in the underlying stock market and 1.09% in the convertible bond market; the daily increase of steel was 1.93% in the underlying stock market and 0.13% in the convertible bond market [56].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - 7 - 8 months have obvious seasonal suppression on the equity market, but there is usually an opportunity for a market rally in the second half of the year. It is recommended to pay attention to upstream and growth sectors in July [1][9]. - The valuation of convertible bonds is currently at a high level, with limited upside potential. It is advisable to focus on rotational opportunities in upstream and growth sectors and adopt a trading - based strategy [3]. 3. Summary by Directory 3.1 7 - Month Equity Calendar Effect: Emphasize Upstream and Growth - Historically, A - shares usually have two overall market opportunities a year, in February - March and October - November respectively. The market is generally suppressed from July to August due to the disclosure of mid - year reports. It is expected that the wide - based index will continue to fluctuate in the short term, and attention should be paid to the second overall opportunity in the second half of the year after the mid - year report disclosure [1][9]. - In July, upstream industries such as steel, non - ferrous metals, agriculture, forestry, animal husbandry, and fishery, and basic chemicals have positive returns, with a winning rate of no less than 50% in the past 10 years. Growth sectors represented by electronics, military, and new energy also have high returns and winning rates [1][9]. - Seasonal factors in production and consumption in July are favorable for upstream industries. As the traditional consumption peak season approaches in the second half of the year and Q3 is the production peak season, the prices of industrial products, metals, and energy - chemical products have generally shown an upward trend in the past 20 years. Additionally, the strengthening of anti - involution policies may lead to price increases in upstream products [2][13]. 3.2 Valuation Outlook: Reaching the Previous High, Suggesting Prudence and Neutrality - As of last Friday, the premium rate per 100 yuan of convertible bonds reached over 25%, approaching the previous highs in October 2024 and March 2025. To break through the previous high, more factual changes are needed. From the perspective of the comparison between convertible bonds and the implied volatility of valuation options, convertible bonds are currently overvalued. It is recommended to focus on rotational opportunities in upstream and growth sectors, and the current is not a good time for allocation [3]. - In June, the convertible bond valuation showed different trends. The convertible bond style shifted to a more conservative one, with the index elasticity and trading volume lower than that of the A - share market. The trading concentration of technology - sector convertible bonds decreased, showing a shift towards cyclical and financial sectors [25]. 3.3 Key Focused Convertible Bonds - From June 4th to July 3rd, the convertible bond portfolio in June had a return of 1.80%, underperforming the benchmark index by 1.98 pct. Rongtai, Mingli, and Zhanggu had relatively high returns, while Huitong had a decline due to unexpected early redemption [33]. - The "Huachuang Convertible Bond" July key - focused portfolio has been adjusted to include Xingqiu, Mingli, Fenggong, Liqun, Rongtai, Zhanggu, Qingnong, Xingye, Huayi, Yifeng, Ziyin, and Zhongyin. The portfolio's bond - selection strategy combines top - down and bottom - up approaches, and the bond - selection requirements include specific criteria for holdings, ratings, and liquidity [36][40][41]. 3.4 Market Review: Slight Increase in Convertible Bonds and Underlying Stocks, Significant Increase in Valuation - In June, the underlying stock market and the convertible bond market both rose. As of June 27th, the Shanghai Composite Index, Shenzhen Component Index, Wind All - A Index, and CSI Convertible Bond Index all increased, with the overall valuation rising by 2.04 pct. Small - cap stocks outperformed, and technology and financial sectors were relatively strong [42]. - In terms of industry performance, most sectors of the underlying stocks and convertible bonds rose in June. The hot concepts mainly included stablecoins, circuit boards, and solid - state batteries. The market hotspots were concentrated in the financial real - estate and TMT sectors [46]. - The trading volume of both the convertible bond and equity markets increased in June. The margin trading balance also recovered rapidly, and most industries received net margin purchases [51][53]. 3.5 Supply and Demand Situation: Increase in New Convertible Bond Supply Month - on - Month, Slowdown in Pre - plan Pace - In June, 6 new convertible bonds were issued, and the Hengshuai Convertible Bond was listed. The online subscription for new convertible bonds heated up, with an average effective subscription amount of 7.25 trillion yuan and an online winning rate of 0.00186595%. The scale of convertible bonds awaiting issuance exceeded 35 billion yuan, and the pre - plan pace slowed down [58][59][64]. - In June, 3 convertible bonds announced downward revisions, 5 announced early redemptions, and many others announced non - redemptions or expected to meet redemption conditions [71][76]. - In May, the holders of convertible bonds on the Shanghai and Shenzhen Stock Exchanges were cautious, and the overall scale continued to decrease. Public funds reduced their holdings, enterprise annuities increased their holdings on the Shanghai Stock Exchange and reduced them on the Shenzhen Stock Exchange, securities company self - operations reduced their holdings, and asset management and collective wealth management increased their holdings [79][83][86].

Primary Market Review - The issuance scale of government bonds, local bonds, and policy financial bonds last week was 430.8 billion, 261.8 billion, and 162 billion respectively, with net financing amounts of 135.1 billion, 124.3 billion, and 63.6 billion [1] - Financial bonds (excluding policy financial bonds) had a total issuance scale of 122.5 billion, with a net financing amount of -7.2 billion [1] - Non-financial credit bonds had a total issuance scale of 392.8 billion, with a net financing amount of 107.3 billion [1] - Two new convertible bonds were issued, with an expected financing scale of 0.9 billion [1] Secondary Market Review - Short-term interest rates in the bond market decreased while long-term rates fluctuated, influenced by factors such as liquidity, the Lujiazui conference, institutional behaviors, and geopolitical conflicts [2] Liquidity Tracking - Last week, there was a net injection through OMO, while MLF matured and was withdrawn, with the central bank conducting buyback operations to support the liquidity during the tax period [3] - The R001 and R007 rates decreased by 1.4 basis points and increased by 1 basis point respectively compared to the previous week [3] Policy and Fundamentals - Economic data for May showed stable production, rising consumption, and declining investment, with structural concerns remaining [4] - High-frequency data indicated a month-on-month decline in production, a decrease in both domestic and external consumption, and price differentiation in the production and residential sectors, with the Middle East conflict driving oil prices significantly higher [4] Overseas Market - The Federal Reserve's June FOMC statement was slightly hawkish, but U.S. consumption and production data were disappointing, exacerbating risk aversion in overseas markets [5] - The 10-year U.S. Treasury yield closed at 4.38%, down 3 basis points from the previous week [5] Equity Market - The A-share market experienced a decline in most broad-based indices due to capital outflows from new consumption and innovative pharmaceuticals, as well as the impact of the Israel-Palestine conflict [6] - Specifically, the Wind All A index fell by 1.07%, the Wind Micro-Cap index dropped by 2.18%, the CSI 300 decreased by 0.45%, and the Sci-Tech 50 fell by 1.55% [6] - A-share trading volume decreased, with an average daily turnover of 1.22 trillion, down 156.644 billion week-on-week [6] - As of June 19, 2025, the total financing balance for the entire A-share market was 1,809.167 billion, an increase of 0.188 billion from June 12 [6] Bond Market Strategy Outlook - Factors favorable to the bond market are gradually increasing in the second half of the year, with bond yields likely to face upward pressure [7] - The 10-year government bond yield has already reflected macro expectations to some extent, and short-term long-end rates are unlikely to present significant excess opportunities in the near term [7] - Short-term rates are still some distance from previous lows, and banks are balancing duration pressures, which may accumulate buying power for short-term bonds [7] - The logic of under-allocation in credit bonds continues, with a strategy prioritizing coupon collection in the short term [7] - In the convertible bond market, supply-demand conflicts persist, and liquidity remains relatively loose, with some banks redeeming convertible bonds, making core varieties scarcer [7] - The convertible bond index has reached the upper range of its fluctuation zone, and opportunities in the index require catalysts, necessitating a focus on switching core varieties and monitoring for trading opportunities driven by sentiment [7]