1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints - Recently, convertible bonds have shown a "negative convexity" characteristic, with returns and drawdowns significantly worse than the underlying stocks. The compression of convertible bond valuations started in the first week after the Spring Festival. Although the equity market performed well during this period, there was an obvious structural shift, and the technology sector was weak. Additionally, non - callable convertible bonds generally entered the second round of call - counting periods. Despite the decent performance of the underlying stocks, high - parity convertible bonds, new bonds, and sub - new bonds actively compressed their valuations due to poor expectations. Subsequently, the conflict between the US and Iran impacted global risk appetite, causing a surge in oil prices and a weak and volatile domestic equity market. The compression of convertible bond valuations spread comprehensively, and the valuations in the debt - biased and balanced intervals also declined significantly. From a rolling perspective, the 100 - yuan premium rate has returned to around the +1 standard deviation level, and the central value has significantly shifted down from the previous high. In the short term, convertible bond valuations have compressed to a stage - low. With the expectation of a mid - term slow - bull equity market, the convertible bond market has shown a certain cost - effectiveness, and opportunities for individual bonds with certain cost - effectiveness in valuation can be actively explored [1][5]. 3. Summary by Directory 3.1 Weekly Viewpoint and Outlook - Convertible bonds have a "negative convexity" feature, performing worse than underlying stocks. The valuation compression started after the Spring Festival, affected by market structure shift, call - counting periods, and the US - Iran conflict. Currently, the 100 - yuan premium rate is around +1 standard deviation, and the convertible bond market has cost - effectiveness [1][5]. 3.2 Convertible Bond Valuation - Due to the surge in oil prices caused by the US - Iran conflict and the new round of Sino - US economic and trade consultations, the domestic equity market stabilized compared to last week, with small and micro - cap stocks relatively weak. Convertible bonds continued to digest valuations this week. After removing outliers, the 100 - yuan premium rate decreased by 0.5% to 31.8%, roughly equal to the +1 standard deviation level. This week, the valuation compression spread from high - parity and long - duration bonds to other intervals, showing a universal full - interval compression. The compression in the debt - biased and balanced convertible bonds was generally over 1%. From a term perspective, the valuation compression of new bonds over 5.5 years was close to 4%, and the compression in the 2 - 4 - year interval was also relatively large. In terms of individual bonds, high - parity bonds above 140 yuan with large valuation compression were mostly those in the call progress or about to enter the call - counting period, with obvious pre - emptive characteristics, and the valuation compression due to call expectations was about 10%. Other bonds with large valuation compression in the balanced and debt - biased intervals were mostly new bonds that had not entered the conversion period. Bonds around 3 years, such as Yake and Daimei, also had relatively large valuation compression due to the downward trend of the underlying stocks. In addition, the valuations in the extremely low - parity area below 60 yuan were generally compressed [4][6][9]. 3.3 Clause Tracking 3.3.1 Redemption - This week, 9 convertible bonds, including Fenggong and Liyang, announced redemptions, and 4 announced non - redemptions, with a call rate of 69%. Currently, there are 31 convertible bonds that have issued call or maturity redemption announcements but have not delisted. Among the non - delisted bonds, the potential conversion or maturity balance of call and maturity bonds is 12.2 billion yuan. There are currently 47 convertible bonds in the redemption progress. 12 are expected to meet the redemption conditions next week, and 11 are expected to issue announcements of potential redemption triggers. In addition, 13 convertible bonds are expected to enter the call - counting period within the next month [23][27]. 3.3.2 Downward Revision - This week, Weining Convertible Bond proposed a downward revision, and no convertible bond announced the result of the downward revision. As of now, 79 convertible bonds are in the non - downward - revision interval, 18 cannot be revised downward due to net asset constraints, 0 have triggered the condition and the stock price is still below the downward - revision trigger price but have not issued an announcement, 21 are accumulating days for downward revision, and 6 have issued the board of directors' pre - plan for downward revision but have not gone to the shareholders' meeting [31]. 3.3.3 Put Option - This week, no convertible bond issued a conditional put option announcement. As of now, 4 convertible bonds are accumulating days to trigger the put option, among which 1 is also accumulating days for downward revision, and 3 are in the non - downward - revision interval [33]. 3.4 Primary Issuance - As of now, there are 6 convertible bonds in the approval - registration progress, with a to - be - issued scale of 5.3 billion yuan; there are 9 convertible bonds in the process of passing the listing committee, with a to - be - issued scale of 8.2 billion yuan [35].

1. Report Industry Investment Rating No relevant information provided. 2. Report's Core View - The A - share market had a good start at the beginning of the year, but convertible bonds ended slightly lower. The poor performance of convertible bonds compared to their underlying stocks was mainly due to the significant valuation compression of high - parity convertible bonds. This compression was widespread, with the largest compression in bonds with strong - redemption potential, new and sub - new bonds, possibly related to poor expectations for the technology sector and expectations of increased convertible bond supply. Although short - term negative factors may impact high - parity convertible bonds, the cost - effectiveness of convertible bonds is expected to emerge after the active valuation compression [1][5]. 3. Summary by Relevant Catalogs 3.1 Week's View and Outlook - The A - share market had a good start in the new year, but convertible bonds ended slightly lower, underperforming their underlying stocks. The large - scale valuation compression of high - parity convertible bonds was the main cause. In the parity range above 140 yuan, there were two main types of significant valuation compression: one was due to the progress of strong redemption, such as Huicheng, Ruichuang, etc.; the other was the active valuation compression of new and sub - new bonds, such as Dinglong, Luwei, etc. Other high - parity convertible bonds also generally saw valuation compression, with only a few bonds that unexpectedly did not trigger strong redemption seeing a valuation increase. This compression may be related to poor technology sector expectations and increased supply expectations. Short - term negative factors may impact high - parity convertible bonds, but the cost - effectiveness of convertible bonds may appear after valuation compression [1][5]. 3.2 Convertible Bond Valuation - In the first week of the new year, the A - share market had a good start, with the main line switching to the "price - increase" cycle sector, while the technology sector performed poorly. The conversion premium rate of high - parity convertible bonds was actively compressed. With outliers retained, the 100 - yuan premium rate declined by over 3 percentage points. After excluding outliers, the 100 - yuan premium rate dropped 0.2% to 32.7%. Without excluding outliers, the 100 - yuan premium rate declined 3.3% [6]. - This week, convertible bond valuations were significantly compressed, with convertible bonds underperforming their underlying stocks. The conversion premium rate of convertible bonds with a parity above 140 yuan was compressed by nearly 5%. The conversion premium rates in each parity range generally declined, with the most significant compression in the high - parity range above 140 yuan, including new, sub - new, and high - parity convertible bonds. The conversion premium rate in the medium - and low - parity ranges declined by about 1% [8]. - From an individual bond perspective, in the parity range above 140 yuan, there were two main types of significant valuation compression: due to strong - redemption progress (e.g., Huicheng, Ruichuang) and active compression of new and sub - new bonds (e.g., Dinglong, Luwei). Other high - parity convertible bonds also generally saw valuation compression. In other parity ranges, new, sub - new, and near - maturity bonds had relatively weak valuation performance [9]. - As of the latest data, the quantile of the conversion premium rate in each parity range generally declined. The quantiles in the high - parity range above 110 yuan showed significant changes, while those in the medium - and low - parity ranges remained close to 100% [13]. 3.3 Clause Tracking 3.3.1 Redemption - This week, 4 convertible bonds (Jiayuan, Songlin, Hongbai, Haiyou) announced redemption, and 8 announced non - redemption, with a strong - redemption rate of 33%. Currently, there are 22 convertible bonds that have announced early redemption or maturity redemption but have not yet delisted, with a potential conversion or maturity balance of 11.9 billion yuan for these non - delisted bonds [18]. - There are currently 49 convertible bonds in the redemption process. Next week, 10 are expected to meet the redemption conditions, and 21 are expected to issue announcements of potential redemption triggers. In addition, 12 convertible bonds are expected to enter the strong - redemption counting period within the next month [20]. 3.3.2 Downward Revision - This week, Lanfan and Baolai convertible bonds proposed downward revisions, and Honglu convertible bond announced the result of a downward revision to the lowest level. As of the latest, 89 convertible bonds are in the non - downward - revision period, 20 cannot be downward - revised due to net - asset constraints, 0 have triggered the condition but the stock price is still below the downward - revision trigger price without an announcement, 16 are accumulating downward - revision days, and 3 have issued board proposals for downward revision but have not yet gone to the general meeting of shareholders [24]. 3.3.3 Put Option - This week, no convertible bonds issued conditional put - option announcements. As of the latest, 1 convertible bond has issued a put - option announcement, and 3 are accumulating put - option trigger days, among which 2 are also accumulating downward - revision days and 1 is in the non - downward - revision period [26]. 3.4 Issuance - As of the latest, there are 5 convertible bonds in the approved - registration process, with a to - be - issued scale of 4.4 billion yuan; 7 convertible bonds have passed the listing committee process, with a to - be - issued scale of 7 billion yuan [29].

Core Viewpoint - The convertible bond market is experiencing increased activity and a shift in dynamics, with a notable rise in the number of bonds being redeemed and a tightening supply amid stable institutional demand [1][2]. Group 1: Market Performance - As of August 18, 2025, the China Convertible Bond and Exchangeable Bond Index rose by 0.96%, while the Convertible Bond ETF increased by 1.12%, reaching a price of 13.39 yuan [1]. - The Convertible Bond ETF has seen a cumulative increase of 1.81% over the past week, indicating a positive trend in the market [1]. - The latest scale of the Convertible Bond ETF reached 52.582 billion yuan, marking a new high since its inception [2]. Group 2: Liquidity and Trading Activity - The Convertible Bond ETF recorded a turnover rate of 10.04% during trading, with a transaction volume of 5.315 billion yuan, reflecting active market participation [1]. - Over the past week, the average daily trading volume of the Convertible Bond ETF was 9.659 billion yuan [1]. Group 3: Fund Flows and Leverage - The Convertible Bond ETF experienced a net outflow of 10.5628 million yuan recently, but over the past five trading days, there were three days of net inflows totaling 3.114 billion yuan [2]. - The net purchase amount of leveraged funds for the Convertible Bond ETF reached 8.275 million yuan this month, with the latest financing balance at 1.061 billion yuan [2]. Group 4: Performance Metrics - As of August 15, 2025, the Convertible Bond ETF achieved a 27.06% increase in net value over the past five years, ranking 16th out of 164 index bond funds [2]. - The ETF's maximum monthly return since inception was 6.61%, with the longest streak of consecutive monthly gains being seven months [2]. - The historical probability of profit for holding the ETF for three years is 76.17% [2]. Group 5: Risk and Tracking Accuracy - The Convertible Bond ETF has a Sharpe ratio of 2.12 over the past year, indicating strong risk-adjusted returns [3]. - The maximum drawdown for the ETF this year was 6.04%, with a recovery period of 79 days [3]. - The management fee for the Convertible Bond ETF is 0.15%, and the custody fee is 0.05% [4]. - The tracking error for the ETF over the past three months was 0.012%, demonstrating its close alignment with the underlying index [5].