1. Report Industry Investment Rating No information provided regarding the industry investment rating. 2. Core Viewpoints of the Report - The recent adjustment in the convertible bond market is a short - term emotional correction rather than a reversal. It is an advance adjustment ahead of the equity market, providing a buffer for potential equity market fluctuations and offering elasticity for convertible bonds to follow the rise of the underlying stocks in the future. The short - term callback presents more opportunities than risks, with trading opportunities potentially greater than allocation opportunities [6][9][10]. - In the long run, a moderate increase in supply is beneficial for the sustainable and healthy development of the convertible bond market. The future trend of the convertible bond market mainly depends on the performance of the underlying stocks. Given the unchanged slow - bull expectation and the unbroken logic of the allocation demand for fixed - income plus products, the risk of continuous and significant valuation reduction in the convertible bond market is low [6][9]. - In the context of global risk evaluation differentiation, the stable domestic and volatile overseas environment is favorable for domestic assets. The main trend remains sideways oscillation with a slight upward trend, and the slow - bull pattern remains unchanged. Mid - cap blue - chip stocks will become the mainstay in the future, and sectors such as non - ferrous metals, chemicals, and agriculture are promising, with incremental demand concentrated in upstream industrial products [6][10]. 3. Summary by Relevant Catalogs 3.1 Convertible Bond Views: Convertible Bonds Retreated Against the Trend, It's an Adjustment Rather Than a Reversal - Last week, the convertible bond market experienced a significant adjustment, with the median conversion premium rate dropping by 5.5 percentage points and the 100 - yuan premium rate also dropping by about 2 percentage points. Market speculations about the reasons include negative factors in the capital market, profit - taking after short - term gains, and concerns about the supply pressure potentially brought by refinancing policies. However, the report believes that the decline is mainly due to market concerns about the significant deviation of the valuation of some high - parity convertible bonds from the fundamentals [6][9]. - In the long run, a moderate increase in supply is beneficial for the sustainable and healthy development of the convertible bond market. The future trend of the convertible bond market depends on the performance of the underlying stocks. With the unchanged slow - bull expectation and the unbroken logic of the allocation demand for fixed - income plus products, the risk of continuous and significant valuation reduction in the convertible bond market is low [6][9]. - The adjustment is regarded as a short - term emotional callback, providing a buffer for potential equity market fluctuations and offering elasticity for convertible bonds to follow the rise of the underlying stocks. The short - term callback presents more opportunities than risks, with trading opportunities potentially greater than allocation opportunities [6][10]. - In the first week after the Spring Festival, the equity index oscillated upward with increased trading volume. The sectors showed differentiation, with cyclical resources leading the rise and consumer and growth sectors showing mixed performance. The factors driving the market include the escalation of the international situation, rising commodity prices, the approaching Two Sessions leading to increased expectations of stable - growth policies, the start of spring construction and spring plowing demand, and the relaxation of real - estate policies [6][10]. 3.2 Convertible Bond Review: Convertible Bond Trading Volume Declined and Valuation Significantly Decreased 3.2.1 Market Overall Performance: Most Equity Indexes Rose and Trading Volume Increased - Last week, the equity market oscillated upward, with small and mid - cap stocks performing strongly. The Shanghai Composite Index rose 1.98%, the Shenzhen Component Index rose 2.80%, the CSI 500 rose 4.32%, the CSI 1000 rose 4.34%, the SSE 50 rose 0.17%, the ChiNext Index rose 1.05%, the STAR Market 50 rose 1.20%, the North Exchange 50 rose 0.48%, and the CSI 2000 rose 3.94%. In terms of industries, steel, non - ferrous metals, and basic chemicals led the rise, while media, commercial retail, and food and beverage sectors led the decline. The average daily trading volume increased by 331.078 billion yuan to 2.44 trillion yuan [14]. - The top ten convertible bonds in terms of gains last week were Youcai Convertible Bond, Shuangliang Convertible Bond, Guanglian Convertible Bond, Dazhong Convertible Bond, Guanzhong Convertible Bond, Xingfa Convertible Bond, Yitian Convertible Bond, Julong Convertible Bond, Ruike Convertible Bond, and Huaya Convertible Bond. In terms of trading volume, Baichuan Convertible Bond 2, Shuangliang Convertible Bond, Dazhong Convertible Bond, Guanglian Convertible Bond, Fengyu Convertible Bond, Shanbo Convertible Bond, Aofei Convertible Bond, Weidao Convertible Bond, Zhenhua Convertible Bond, and Jiaze Convertible Bond were relatively active [14]. 3.2.2 Convertible Bond Trading Volume Declined, and High - Price and Large - Cap Convertible Bonds Had Larger Declines - Last week, convertible bonds were significantly adjusted, with the valuation of high - parity convertible bonds dropping significantly. The average daily trading volume decreased to 68.138 billion yuan. The CSI Convertible Bond Index dropped 0.23%, the median parity rose 3.3% to 111.0 yuan, and the median conversion premium rate dropped 5.5 percentage points to 29.3%. In terms of style, mid - and low - rated convertible bonds performed better last week, while high - price and large - cap convertible bonds performed weakly [20].

Core Viewpoint - The recent fluctuations in the equity market, influenced by geopolitical conflicts, tempered expectations for a December Fed rate cut, and profit-taking by institutions, have led to a high-level oscillation in major stock indices. This has resulted in a strong performance of convertible bonds, with indices showing significant increases since November [1]. Group 1: Convertible Bonds Performance - The convertible bond indices, including the China Securities Convertible Bond Index, Shanghai Convertible Bond Index, and Shenzhen Convertible Bond Index, have risen by 1.39%, 1.15%, and 1.64% respectively since November, indicating a robust market sentiment [1]. - The convertible bond market has reached a yearly high, with the Shenzhen Convertible Bond Index surpassing its August peak [1]. Group 2: Characteristics of Convertible Bonds - Convertible bonds are defined as bonds that can be converted into stocks at a predetermined price within a specified period, distinguishing them from regular credit bonds due to their conversion rights [2]. - Key features of convertible bonds include regular principal and interest payments, the ability to convert into stocks, price sensitivity to the underlying stock, and additional clauses such as redemption and put options that complicate their pricing [2]. Group 3: Market Outlook - The core logic supporting the current equity market bull run remains intact, driven by a low-interest-rate environment and domestic policy support, suggesting a sustained bullish trend in the domestic equity market [2]. - The pure bond market is experiencing limited disturbances due to the central bank's supportive monetary policy and a resumption of government bond trading, which keeps yields from rising significantly [3]. - The supply-demand dynamics in the convertible bond market are expected to remain tight, with limited issuance and strong demand driven by the anticipated performance of convertible bonds compared to pure bonds [3].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The convertible bond market reached a critical stage in June 2025, a high - incidence period for convertible bond credit events. The report reviews the 2024 convertible bond credit storm and seeks coping strategies [1][9]. - The 2024 credit shock was the most extensive in the history of the convertible bond market. The root cause was the weak performance of the underlying stocks, and there were also other factors such as issuer fundamentals, market structure, and institutional behavior [2][3]. - In 2025, the approach to convertible bond credit risks has changed. The probability of a continuous and significant decline in the equity market has decreased, reducing delisting risks and repayment pressure. It is recommended to appropriately explore opportunities for mispricing repair [4][73]. 3. Summary According to the Catalog 3.1. Revisiting the 2024 Credit Storm: A Lesson from History 3.1.1. Review of Seven Important Credit Storm Events - **Event 1: April 2024 - New Nine - National Policies and Delisting Rules Triggered a Small - Scale Credit Shock**: On April 12, 2024, the new Nine - National Policies and delisting rules were released, causing significant differentiation in the equity and convertible bond markets. Small - cap stocks were under pressure, and nearly a hundred convertible bonds fell more than 5% within two days. Investor sentiment became cautious. After the regulatory clarification, the market recovered, and there was an inflow of incremental funds, but it also laid the groundwork for subsequent adjustments [11][12]. - **Event 2: May 2024 - Concentration of Credit Events of Weak - Quality Individual Bonds Signaled the Brewing of a Major Credit Storm**: In late April, some convertible bonds were affected by ST or non - disclosure of annual reports. In May, credit events such as debt overdue and rating downgrades of Lingnan Convertible Bond, and rating downgrades of Sanfang and Hongtu Convertible Bonds shattered the recovery trend of low - price bond valuations [18]. - **Event 3: Mid - June 2024 - Doubts about the Capital Chain of Photovoltaic Convertible Bonds Led to Institutional Selling**: On June 19, due to concerns about the capital liquidity of a photovoltaic component convertible bond issuer and the actual controller's attempt to reduce holdings, there was a large - scale sell - off of photovoltaic convertible bonds, intensifying market credit concerns [23]. - **Event 4: Late June 2024 - Concentrated Rating Downgrades, Including Unexpected Large - Cap Bonds**: After the adjustment of photovoltaic convertible bonds, there was a concentrated rating downgrade. The rating downgrade of Wentai Convertible Bond on June 20 significantly exceeded expectations, suppressing institutional sentiment and increasing concerns about future rating adjustments [29]. - **Event 5: Self - Rescue of Shanying Convertible Bond**: Shanying Convertible Bond faced repayment pressure. After the issuer announced a series of self - rescue measures on June 21, the bond price rebounded. Eventually, with the recovery of the equity market, the bond's parity rose above the maturity repayment price, and the repayment pressure was greatly relieved [35][36]. - **Event 6: Guanghui Convertible Bond's Repeated Struggles and Final Delisting**: Due to industry and company - specific problems, Guanghui Convertible Bond's underlying stock price fell below the face value, triggering delisting risk. Despite efforts to boost the stock price, it still entered the delisting process on July 18, causing market adjustments [40][41]. - **Event 7: Lingnan Convertible Bond's Default Shocked the Market**: On August 14, 2024, Lingnan Convertible Bond announced its inability to pay principal and interest on schedule, becoming the first convertible bond to default in the market. Its default had a greater impact on the market than previous defaults [45]. 3.1.2. Scar Effect of the Credit Storm - The 2024 credit shock was the most extensive in history, with over 50% of convertible bonds falling below the bond floor, and the proportion of bonds falling below the face value was also at a historical high [47]. - The pricing anchor for weak - quality individual bonds was lost, making it difficult for investors to make decisions. However, considering industry cycles and issuer efforts, the bond floor can still be used as a pricing anchor for debt - oriented convertible bonds [51][52]. - In terms of market structure, cyclical sectors such as agriculture, new energy, and chemicals had a higher proportion of convertible bonds falling deeply below the bond floor. AAA - rated convertible bonds had stronger credit risk resistance [55]. 3.2. Essence and Enlightenment of the Credit Storm - **Root Cause**: The weak performance of the underlying stocks was the root cause of the 2024 convertible bond market decline. When the equity market was weak, credit events would amplify negative feedback. In addition, there were other factors such as low - risk - preference incremental funds, weak issuer fundamentals, regulatory tightening, and market structural "aging" [3][60][64]. - **Coping Strategies**: Monitor the equity market's small - cap sector. Avoid bonds with obvious risks, especially those with high delisting pressure. Adjust positions based on the credit impact on different - quality bonds. During the shock, allocate large - cap and near - bond - floor bonds. Institutions with stable liabilities can consider participating in mispriced markets, while those with sensitive liabilities should wait for positive equity signals [68][69].