Report Industry Investment Rating - No investment rating information is provided in the report. Core Viewpoints of the Report - Since the beginning of the year, the scale of convertible bond ETFs has rebounded, but its correlation with the index has weakened. Market fluctuations are mainly dominated by the equity side. The trading volume shows a divergence, which may reflect that investors' attitude towards valuation is marginally tightening [2][5]. - During the week, the A - share market was volatile and differentiated. The small - and medium - cap style was dominant. Cyclical manufacturing sectors such as building materials and chemicals led the rise, and trading was concentrated in the electronics and power equipment sectors [2][5]. - The convertible bond market strengthened as a whole. The small - cap index outperformed the large - cap index. The implied volatility and the median market price broke through historical highs, and the sentiment was warm. Some high - price and high - conversion premium rate targets led the gains [2][5]. - The primary market issuance was relatively stable with sufficient reserves. Clause games remained the focus. The willingness to lower the conversion price was still weak, while the call option game intensified, and the market's attention to call - counting varieties increased [2][5]. Summary According to Relevant Catalogs 1. Market Theme Weekly Review - During the week (January 18 - 24, 2026), the equity market strengthened as a whole. Themes in the photovoltaic and semiconductor directions performed strongly. Among them, the advanced packaging index, magnetoelectric storage index, photovoltaic selected index, and TOPcon battery index in the photovoltaic and semiconductor directions performed well, while the industrial Internet index, Chinese corpus index, and Sora index in the AI application direction were under pressure [28][29]. 2. Market Weekly Tracking 2.1 Main Indexes Differentiated, Science and Technology Innovation and Mid - cap Performed Strongly - During the week, the main A - share indexes were volatile and differentiated. The Shanghai Composite Index and the Shenzhen Component Index strengthened, while the ChiNext Index declined and then rebounded but still closed down. In terms of style, the small - and medium - cap indexes were relatively dominant, and the CSI 500 Index and the CSI 2000 Index outperformed the Science and Technology Innovation 50 Index and the CSI 300 Index [32]. - In terms of capital, the net outflow of the market's main funds converged. The average daily trading volume of the market declined, and the net outflow of the main funds slightly converged. Among them, the main funds were net inflow on Wednesday [33]. - The cyclical manufacturing sectors in the A - share market were relatively strong. Building materials, basic chemicals, steel, petroleum and petrochemicals, and non - ferrous metals led the rise, while non - bank finance, communication, media, and banking performed weakly [35]. - In terms of trading volume, the electronics and power equipment sectors were the focus of trading. The trading volume was mainly concentrated in these two sectors, and the trading volume of the electronics sector accounted for 19% [36]. - The market sector congestion was still significantly differentiated. The congestion in cyclical manufacturing directions such as machinery, national defense and military industry, basic chemicals, and petroleum and petrochemicals increased, while the congestion in sectors such as commercial retail, media, and social services decreased [39]. 2.2 Convertible Bond Market Strengthened as a Whole, Small - cap Index Performed Strongly - During the week (January 18 - 24, 2026), the convertible bond market strengthened as a whole. The CSI Convertible Bond Index strengthened, with the small - cap convertible bond index performing relatively strongly, and the large - cap convertible bond index performing weaker than the CSI Convertible Bond Index. The trading volume slightly converged, and the average daily trading volume was still around 100 billion [42]. - Valuation: By parity range, the convertible bond market valuation stretched as a whole. The conversion premium rate of convertible bonds in the 110 - 120 yuan parity range stretched significantly, while that in the 130 - 140 yuan parity range compressed significantly. By market price range, the convertible bond market valuation compressed as a whole, and only the conversion premium rate in the 120 - 140 yuan market price range stretched, while that in the 110 - 120 yuan market price range compressed significantly [46]. - The balance - weighted implied volatility of the convertible bond market strengthened. The balance - weighted implied volatility of the whole - market convertible bonds on Friday was stronger than that on the previous Friday, breaking through the historical high [49]. - The median market price of convertible bonds strengthened. The median of convertible bonds strengthened compared with the previous Friday, breaking through the previous historical high again [50]. - Convertible bonds in cyclical manufacturing sectors were more elastic. Machinery, basic chemicals, and national defense and military industry sectors led the rise. In terms of trading volume, trading was mainly concentrated in the electronics, basic chemicals, and power equipment sectors, and the total trading volume of these three sectors accounted for more than 35% [54]. - Individual bonds generally recovered. The number of convertible bonds with an interval increase of 0 or more was 335, accounting for 86.6% of the total number of outstanding convertible bonds in the market. The top five convertible bonds in the conversion period in terms of weekly increase were Fuxin Convertible Bond, Jiamei Convertible Bond, Tianchuang Convertible Bond, Zhekuang Convertible Bond, and Huayi Convertible Bond. The top five in terms of decline were Rundar Convertible Bond, Xinzhi Convertible Bond, Xinfu Convertible Bond, Tianjian Convertible Bond, and Dongshi Convertible Bond. The top five rising bonds generally had the characteristics of high market price and high conversion premium rate [56]. 3. Convertible Bond Issuance and Clause Tracking 3.1 Primary Market Pre - issuance Situation - During the week (January 18 - 24, 2026), there was no convertible bond listed, and 2 convertible bonds were available for subscription, namely Longjian Convertible Bond and Aiwei Convertible Bond. Longjian Convertible Bond is issued by Longjian Co., Ltd., with a latest debt rating of AA and an issuance scale of 1 billion. Aiwei Convertible Bond is issued by Aiwei Electronics Co., Ltd., with a latest debt rating of AA+ and an issuance scale of 1.9 billion [60]. - A total of 9 listed companies updated their convertible bond issuance plans. One was in the approved - for - registration stage, 4 were in the exchange - acceptance stage, and 4 were in the stage of passing the general meeting of shareholders. The total scale of projects in the exchange - acceptance stage and later stages was more than 80 billion [61]. 3.2 Lower - price - adjustment - related Announcement Summary - Three convertible bonds issued announcements of expected triggering of lower - price adjustment, with a market - value - weighted average PB of the underlying stocks of 2.7. Seven convertible bonds issued announcements of not adjusting the price down, with a market - value - weighted average PB of the underlying stocks of 3.0. One convertible bond issued an announcement of proposing to adjust the price down, with a PB of the underlying stock of 2.2 [66][67][68]. 3.3 Redemption - related Announcement Summary - Five convertible bonds announced expected triggering of redemption. Two convertible bonds announced not to redeem in advance. Six convertible bonds announced early redemption [69][70][72].

1. Report Industry Investment Rating - Not provided in the content 2. Core Views of the Report - The key to economic recovery lies in the direction of the cash - flow statement, not "policy exceeding expectations". The economy may continue to recover even without super - expected policies, and subsequent economic conditions may remain favorable [2][4] - The pre - condition for interest rate cuts is an economic downturn, which may not be met currently. If conditions are triggered, the central bank is more likely to cut interest rates by 10BP [6] - There is an upward risk for the 10 - year Treasury bond yield. The report is optimistic about the convertible bond market in 2025, favoring domestic demand in the second and third quarters and external demand in the fourth quarter [6][7] 3. Summary by Related Content Economic Recovery and Policy Impact - Economic recovery does not rely on "policy exceeding expectations". For example, from Q4 2024 to Q1 2025, there were no super - expected policies, but the economy exceeded market expectations. Also, past policy measures like interest rate cuts and special bond issuances did not always lead to positive market responses [2][3] - The key to economic recovery is the direction of the cash - flow statement. Fiscal policy (accelerating bond issuance and use), debt resolution methods (expanding cash - flow statements after September 2024), and monetary policy (moderately rising social financing stock growth) all contribute to economic recovery. Incremental policies in finance, currency, and real estate are expected to further expand the cash - flow statement [4] - Although exports may decline due to US tariffs, the decline may be better than expected. After Q4 2024, with the cash - flow statement turning upward and policy support, the economy may maintain a good level [5] Interest Rate Cut Conditions - "Timely" and "opportunistic" for reserve requirement ratio and interest rate cuts are just different in applicable levels. The condition for "timely reserve requirement ratio and interest rate cuts" in the Politburo meeting may be an obvious downward economic trend. As the economy has not shown a significant downward trend in the past 5 months, the measure has not been implemented. If the economy stabilizes and recovers in Q2 and Q3 2025, the condition for interest rate cuts may not be triggered. If triggered, the central bank may cut interest rates by 10BP [6] Bond Yield and Convertible Bond Market - The current pricing of the 10 - year Treasury bond yield implies a significant decline in DR007 or OMO interest rate cuts. If the capital interest rate does not decline significantly from late April to May, there is an upward risk for the 10 - year Treasury bond yield. The triggers for bond yield increases may include capital, economic, and stock market factors [6][7] - The report is optimistic about the convertible bond market in 2025. If the market corrects after the April 2025 Politburo meeting, it may present an opportunity similar to that in January 2025. It favors domestic demand in the second and third quarters and external demand in the fourth quarter, with possible reasons including China's industrial chain trends, China - EU negotiation progress, and China's substitution of US exports [7]