1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoint The convertible bond market currently meets the pre - condition of "long - term and significant valuation increase with the hundred - yuan premium rate at a historical high", but the recent upward trend of the equity market remains intact, and there has been no prior continuous shock adjustment to erode market confidence. Therefore, convertible bond valuations are expected to continue to fluctuate in the short - to - medium term. Future focus should be on equity trends and expected changes [3][25]. 3. Summary by Related Catalogs 3.1. Convertible Bond Sharp Valuation Compression Reappears, Conditions for Continuous Compression Not Met - On August 27, 2025, the CSI Convertible Bond Index dropped 2.82% in a single day, the hundred - yuan premium rate compressed by 3.48 pcts to 29.08%, and the trading volume exceeded 110 billion yuan. One reason for the sharp valuation compression was the vulnerability of convertible bond valuations at a historical high, and the other was the first significant net redemption of first - and second - tier bond funds since continuous net subscriptions in July, with securities firms, trusts/futures, and wealth management subsidiaries contributing the main net redemption volume [1][5]. - There were differences in the intraday performance of valuation compression. In terms of rhythm, the compression slope of the convertible bond hundred - yuan premium rate started to increase around 11:20, while the convertible bond underlying stock index lagged behind and began to decline rapidly around 13:25. After the lunch break, the equity market continued to decline, but the hundred - yuan premium rate bottomed out and fluctuated around 14:00. Structurally, the compression of the fitted premium rate of low - parity convertible bonds was more obvious, the valuations of financial and AA+/AAA convertible bonds were relatively resilient, and new bonds (listed for less than 1 year) had the largest valuation compression in the morning but also a strong rebound after the lunch break [1][8]. 3.2. Historical References for Rapid Valuation Compression - Since 2017, there have been 17 times when the single - day valuation compression of the hundred - yuan premium rate exceeded 2 pcts. Nine of these occurred during the period from 2017 - 2018 when the sample size was small and fluctuations were large, and the rest occurred on 2020 - 03 - 23, 2021 - 12 - 07, 2022 - 02 - 14, 2022 - 02 - 15, 2022 - 08 - 19, 2024 - 02 - 28, 2025 - 04 - 07, and 2025 - 08 - 27 [2][10]. - **2020 - 03 - 23**: Due to the unexpected spread of the pandemic globally, leading to deep adjustments in equity markets in many countries/regions. The Wind All - A Index dropped 3.81% and the Nasdaq Index dropped 9.49% on that day. Convertible bond valuations compressed by 2.55 pcts due to panic, but they stabilized and recovered as the global equity markets stabilized [10]. - **2021 - 12 - 07**: A typical period when convertible bond fluctuations increased after a rapid valuation increase to a high level. On that day, the conversion premium rate compression of high - priced convertible bonds and the decline in convertible bond prices were both prominent. However, from the end of 2021 to the beginning of 2022, fixed - income + funds and insurance funds entered the market significantly. With strong support from the capital side and the strength of convertible bond underlying stocks represented by small - cap stocks, convertible bond valuations continued to rise after a two - day correction, and the CSI Convertible Bond Index also fluctuated upward [14]. - **2022 - 02 - 14 and 2022 - 02 - 15**: The Wind All - A Index had been oscillating and declining for over 2 months, and convertible bond underlying stocks also had a sharp adjustment in mid - January. However, convertible bond valuations continued to oscillate upward, creating a divergence. After the equity market rebounded in early February but quickly declined again, the convertible bond market lost confidence and patience, resulting in a sharp valuation decline in mid - February. After the equity market stabilized in mid - to - late February, convertible bond valuations did not continue to decline, and only continued to compress when the equity market adjusted again in March [14]. - **2022 - 08 - 19**: Similar to the situation in February 2022, convertible bond valuations climbed to a high level. The Wind All - A Index had already adjusted significantly in advance, but convertible bond valuations remained high. After the small - and micro - cap stocks declined, the valuations were quickly adjusted to a relatively reasonable level of around 26%. However, the continued adjustment of the equity market caused convertible bond valuations to continue to decline [15]. - **2024 - 02 - 28**: During the repair process of the squeeze - out decline of small - and micro - cap stocks caused by quantitative funds, on the 28th, affected by market rumors about quantitative fund supervision, the equity market adjusted sharply again. The convertible bond underlying stock index mainly composed of small - and micro - cap stocks dropped 5.83%, and the hundred - yuan premium rate compressed by 2.29 pcts. After the rumor effect subsided, the equity market continued to repair, and convertible bond valuations stabilized, oscillated, and recovered the next day [18]. - **2025 - 04 - 07**: Mainly due to unexpected changes in peripheral tariff policies, the Wind All - A Index dropped 9.26% and the convertible bond underlying stock index dropped 12.19% on that day. Affected by the pessimistic sentiment in the equity market, convertible bond valuations compressed by 2.53 pcts. However, the subsequent equity market continued to repair, and the hundred - yuan premium rate rose 2.48 pcts on April 8, basically recovering all the losses [18]. - In the two sample periods of 2022 - 02 - 14 and 2022 - 08 - 19, there was still significant valuation decline in the 30 trading days after the rapid valuation compression. The commonalities were long - term and significant valuation increases before the compression, with the hundred - yuan premium rate at a historical high, and the equity market had started to oscillate and adjust, and continued to weaken in the future [2][19]. - In other sample periods, neither the decline of convertible bond valuations nor the CSI Convertible Bond Index lasted more than 3 days, and there was no obvious continuous compression of convertible bond valuations in the 30 trading days after the rapid valuation compression, regardless of whether the equity market rose, oscillated, or declined [3][23].

Report Industry Investment Rating No industry investment rating information is provided in the report. Core View of the Report - During the week from May 12 to May 17, 2025, the A-share market showed a volatile consolidation pattern with intensified structural rotation. The market style shifted from high - elasticity gaming to defense and low - level replenishment. The CSI Convertible Bond Index rose slightly by 0.32%, with a mild recovery in trading volume. The valuations in the low - and medium - price ranges were significantly compressed, while those of medium - to high - parity individual bonds were slightly repaired. There were still structural opportunities at the individual bond level. The primary market supply rhythm was active, the clause gaming remained cautious, and the redemption disturbance was generally controllable. It is recommended to focus on low - premium and high - prosperity individual bonds in the allocation, while also considering the stable allocation value of high - rated blue - chip convertible bonds [2][6]. Summary by Relevant Catalogs Market Weekly Review Equity Market - The A - share market was volatile and differentiated. The Shanghai Composite Index rose 0.8%, the ChiNext Index rose 1.4%, and the CSI 2000 Index rose 1.0%. The market style shifted from gaming elasticity to stable defense. Industries such as beauty care, banking, and transportation led the gains, while high - valuation growth sectors such as computer, military, and electronics adjusted. The daily average trading volume decreased to 1.2 trillion yuan, and the daily net outflow of main funds increased to 150 million yuan [10]. Convertible Bond Market - The convertible bond market was volatile. The CSI Convertible Bond Index rose 0.32%, and the daily average trading volume recovered to 637 million yuan. The median market price rose slightly to 112.39 yuan, and the balance - weighted implied volatility fell to 19.3%. The valuations in the low - and medium - price ranges were significantly compressed, while those of medium - to high - parity individual bonds were slightly repaired. In the primary market, 11 listed companies updated their convertible bond issuance plans, and in terms of clause gaming, 5 convertible bonds were expected to trigger a downward revision, 12 announced no downward revision, 2 proposed a downward revision, 5 announced an expected redemption, and 2 announced no early redemption [10]. Market Theme Weekly Review Equity Theme - The A - share theme market showed significant high - low switching. The trading - style indexes such as the daily limit hitting index, the first - board non - ST index, and the first - board index led the gains, while the growth sectors such as the pan - AI direction adjusted significantly. The market style shifted from high - elasticity gaming to low - level gaming and defense [15]. Convertible Bond - The convertible bond market rose first and then fell, with a mild recovery in trading volume. The CSI Convertible Bond Index rose 0.32%, and small - cap convertible bonds were relatively active. The valuations of medium - to high - parity convertible bonds were slightly repaired, while those in the low - price range were compressed. The market continued the pattern of structural rotation and theme gaming. It is recommended to pay attention to medium - and high - priced bonds with sufficient valuation compression, positive stock catalysis, and prosperity support [18]. Weekly Industry Outlook - The A - share market will continue the structural volatile pattern, with short - term market dominated by theme gaming and sentiment driving. High - elasticity directions such as the daily limit hitting index are strong, but the adjustment pressure on previous high - level themes such as AI and military is expected to continue. In the convertible bond market, the index rose first and then fell, with a mild recovery in trading volume. Low - priced convertible bond valuations were rapidly compressed, and medium - and high - priced bonds had valuation repair elasticity. It is recommended to pay attention to medium - and high - priced convertible bonds with fully adjusted valuations and strong fundamental support, as well as high - rated, low - premium bonds with "bond bottom + theme" dual characteristics [20]. Market Weekly Tracking Equity Market Style and Capital Trends - The main A - share indexes were volatile and differentiated. The Shanghai Composite Index rose 0.8%, and the ChiNext Index was relatively strong, rising 1.4%. The market style shifted to defense, and industries such as beauty care, banking, and transportation led the gains, while high - valuation growth sectors such as computer and military adjusted. The daily average trading volume decreased to 1.2 trillion yuan, and the daily net outflow of main funds increased to 150 million yuan. The capital allocation rhythm became more cautious, and the trading structure shifted from high - elasticity to stable defense [21][28]. Convertible Bond Market - The convertible bond index rose first and then fell, with small - cap convertible bonds being more elastic. The CSI Convertible Bond Index rose 0.32%, and the daily average trading volume recovered to 637.4 million yuan. By parity interval, the valuations of medium - and high - parity convertible bonds were stretched, while those in the low - price range were compressed. By market price interval, the valuations were generally compressed. The implied volatility of the whole market was at a historical low, and the median price of convertible bonds rose slightly. There were significant differences in the performance of convertible bonds between sectors, and individual bonds were also differentiated. The primary market supply was active, and clause gaming was an important trading auxiliary [39][43][52]. Primary Market Tracking and Clause Gaming Primary Market Issuance Plan - 11 listed companies updated their convertible bond issuance plans, including 2 approved for registration, 2 accepted by the exchange, 5 passed by the general meeting of shareholders, and 2 at the board of directors' plan stage. The total scale of projects at the exchange - accepted and subsequent stages reached 5.9 billion yuan [10][61]. Clause Gaming - In terms of downward revision, 5 convertible bonds were expected to trigger a downward revision, 12 announced no downward revision, and 2 proposed a downward revision. In terms of redemption, 5 convertible bonds announced an expected redemption, 2 announced no early redemption, and 0 announced an early redemption [10][68][72].