Group 1: Investment Rating - The report does not provide an overall investment rating for the bond industry. Group 2: Core Views - Market fluctuations have caused some disturbances to the liability side, but overall liability side stability remains acceptable. ETFs and "fixed income +" funds have seen small net outflows, but the pace has slowed compared to early September, and insurance funds still focus on allocation. [3][8] - In a volatile market, the operating strategies of public - offering institutions have diverged. Low - volatility strategy funds aiming for absolute returns may have reduced their allocations to high - price bonds and convertible bonds in general, while high - volatility tolerance products and relative return funds can increase allocations to some convertible bond issues with sufficient corrections and fundamental support. [3][9] - Different - priced convertible bonds have different performances and strategies. High - price convertible bonds have proven their upward logic, and for high - tolerance funds, holding is better than trading. Medium - price convertible bonds are the core of the "attack - and - defense" strategy, and bonds with reasonable price structures and catalytic expectations should be selected. The valuation of low - price (partial - debt) convertible bonds has reached an extreme level, and caution should be exercised. [2][3][9] - In October, investors are advised to pay attention to Shangyin Convertible Bond, Shouhua Convertible Bond, Jingke Convertible Bond, Kangtai Convertible Bond 2, Baolong Convertible Bond, Keshun Convertible Bond, Yingbo Convertible Bond, Huaya Convertible Bond, Wankai Convertible Bond, and Luwei Convertible Bond. [3][13] Group 3: Summary by Directory 1. Convertible Bond Weekly Thinking - The convertible bond market has shown limited adjustments and slight recoveries. In the past week, the ChinaBond Convertible Bond Index rose by about 1 percentage point, and the 100 - yuan premium rate also slightly recovered. [8] - The liability side of convertible bonds remains stable. Although there are small net outflows from some funds, the overall situation is improving, and insurance funds still focus on long - term allocation. [3][8] - Public - offering institutions' strategies have diverged. Low - volatility funds reduce positions, while high - volatility tolerance funds increase positions in some high - quality bonds. [3][9] - Different - priced convertible bonds have different characteristics and strategies. High - price bonds are suitable for holding, medium - price bonds need comprehensive screening, and partial - debt bonds should be treated with caution. [2][3][9] 2. Convertible Bond Market Tracking 2.1 Convertible Bond Market Conditions - Different convertible bond indexes have different performances in different time periods. For example, the Wind Convertible Bond Energy Index has a 0.14% increase in the past week, - 0.91% in the past two weeks, etc. [14] 2.2 Convertible Bond Issues - The report shows the top ten and bottom ten convertible bond issues in terms of price changes in the past week, but specific issue names are not provided in the text. [18] 2.3 Convertible Bond Valuations - The report presents the valuation trends of different types of convertible bonds (debt - type, balanced, and equity - type) through charts, but specific data analysis is not provided in the text. [21][26][28] 2.4 Convertible Bond Prices - The report shows the proportion trends of high - price convertible bonds and the median price trends of convertible bonds through charts, but specific data analysis is not provided in the text. [24][25][31]

Group 1 - The report indicates that the convertible bond market experienced significant fluctuations in August, with the convertible bond index showing an upward trend but facing adjustments towards the end of the month due to various factors including the weakening of the banking sector and an increase in strong redemption of convertible bonds [3][6][7] - The strategy for September suggests a cautious approach towards convertible bonds, with expectations for lower returns due to the "dumbbell" style weakening and the potential for short-term adjustments in the market [3][33] - The report highlights the validation of the "potential yield" indicator system, which indicated a significant risk of short-term adjustments in the convertible bond market as the implied three-month yield fell below -5% [3][19][22] Group 2 - The report outlines a revised monthly strategy composition for September, which includes three components: short-term high-odds selection, low-price enhancement strategy, and active selection, reflecting the current market environment [3][35] - Specific convertible bonds are recommended for attention in September, including the high-odds selection of Pudong Development Bank Convertible Bond, and low-price enhancement strategies focusing on Jia Yuan, Jingke, Southeast, and Fangyuan Convertible Bonds [3][36][37] - The active selection strategy emphasizes avoiding bonds with a high likelihood of strong redemption while maintaining a focus on sectors with growth potential [3][38]

Group 1 - The core viewpoint of the article highlights that the recent surge in the convertible bond market is driven by three main factors: strong performance in the equity market, historically low bond yields, and tight supply due to refinancing regulations [1] - The convertible bond market can be viewed as a combination of ordinary bonds and stock call options, providing investors with both fixed income and potential capital appreciation [1][2] - The current support for the convertible bond market is heavily reliant on the equity market's performance, suggesting that if the equity market continues to perform well, convertible bonds may also exhibit upward momentum [1][2] Group 2 - Investors are cautioned against the misconception that high-priced convertible bonds always have downside protection, as their price movements may closely follow the underlying stocks [2] - For high-risk investors, low premium, high elasticity convertible bonds are recommended to construct a balanced investment portfolio aimed at capturing excess returns [2] - The index for convertible bonds and exchangeable bonds is based on a large sample size from the Shanghai and Shenzhen stock exchanges, using a market capitalization-weighted method to balance index volatility [3]

Core Viewpoint - The convertible bond market has reached new highs, with average prices surpassing 124 yuan, while theoretical constraints on convertible bond pricing may limit future price increases [1][2]. Group 1: Market Performance - As of July 8, the convertible bond index has risen by 8.28% since the beginning of the year, with an average closing price of 124.00 yuan, placing it in the 93rd percentile since 2020 [1]. - The median closing price is 125.78 yuan, also in the 93rd percentile since 2020, indicating a significant increase in bond prices [1]. - The proportion of low-priced convertible bonds (below 110 yuan) has decreased to 3.63%, reflecting a tightening supply of affordable options [1]. Group 2: Valuation and Market Dynamics - The average parity of convertible bonds is 94.72 yuan, with an average conversion premium of 44.46%, suggesting a significant elevation in current valuations compared to historical levels [2]. - Three scenarios for the equity market's future are proposed: continued upward movement leading to redemptions of bank and brokerage bonds, a sideways market prompting profit-taking, and a downward trend resulting in valuation declines for high-premium bonds [2]. - The short-term outlook suggests a potential consolidation in the equity market, with a focus on structural opportunities in convertible bonds, particularly through low-price and non-redeemable strategies [2]. Group 3: Challenges and Strategies - Current challenges in selecting convertible bonds include a scarcity of low-priced options, high valuations, and the equity market being at a cyclical peak [3]. - Suggested strategies to navigate these challenges include focusing on sectors with strong earnings potential, such as electronics and semiconductors, and identifying non-redeemable bonds that may offer premium opportunities [3]. - The approach also emphasizes finding price or valuation gaps to mitigate the impact of high pricing in the current market [3].

Group 1 - The core viewpoint emphasizes that convertible bonds with strong underlying stocks and high volatility are the most cost-effective options in the current market environment [2][17] - The market saw a significant increase in the convertible bond index, with a weekly rise of 2.08% and an average price increase of 4.54% [2][9] - The average conversion premium across different price ranges showed varied changes, indicating a shift in market sentiment and valuation [9][18] Group 2 - The report suggests that investors should avoid low-priced strategies in the convertible bond market and focus on high-volatility, strong underlying stocks for better returns [2][17] - It highlights the importance of adjusting positions based on risk tolerance, recommending a shift to lower volatility sectors for those with high withdrawal requirements [2][17] - The analysis indicates that the convertible bond market still has incremental capital inflow, benefiting from the profit-taking effect observed at the end of June [2][17]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The report suggests adopting a "wait-and-see" approach for convertible bonds, seeking structural opportunities before the inflection point of the small and medium - cap stocks in the equity market. It also advises paying attention to changes in the liability side and taking appropriate profit - taking on some high - position varieties. Given the current situation, the style preference is elasticity > bond nature [5][27]. - Structurally, investment strategies are proposed from three aspects: option value strategy, absolute price strategy, and theme trading strategy [6][28]. Summary by Relevant Catalog 1. Overall Market Performance - The overall performance of the convertible bond market last week was positive. The CSI Convertible Bond Index has continuously risen since the end of May and has now returned to the level of late March. In terms of market capitalization style, during the four trading days after the Dragon Boat Festival, the small - cap style index outperformed the medium and large - cap varieties, showing a more trading - like market, which was also reflected in the industry sectors. Affected by factors such as the strong performance of new consumption and positive fundamentals of innovative drugs, the TMT and consumption sectors outperformed the cyclical and manufacturing sectors [5][9]. 2. Cumulative Entanglement: Spiral Rise of Price and Valuation - As the small - cap style returned to the upward range this week, the CSI Convertible Bond Index continued to rise. The median price of convertible bonds in the 90 - 110 yuan parity range has reached 122 yuan, at the upper edge of the oscillation range this year, and the valuation has exceeded 20%. However, compared with the May rebound, this round of the market shows a trend from large - cap convertible bonds to small - cap ones. For fixed - income + investors with a balanced and stable risk preference, the high - valuation environment increases the holding pressure [5][11]. 3. Using the Elimination Method: Liability - Side Emotional Changes May Be More Important 3.1 Credit Risk Impact - Localized - Since 2020, except for 2024, the number of rating downgrades each year has been within 30, and mid - to late June is the peak period for rating adjustments. As of now, the frequency of rating downgrades in 2025 is not significantly higher than the same period from 2020 - 2024, and the downgraded companies mostly face operational pressures. Except for the period since June 2024, the retracement of convertible bond varieties during the rating adjustment periods in other years was relatively controllable. Therefore, the credit risk impact on convertible bonds in 2025 may be "localized" [5][16]. 3.2 Liability - Side Changes and Valuation - Still in Entanglement - Using convertible bond ETFs as a benchmark, in the past 5 trading days, the product has shown a stable circulation scale but continuous share redemptions, indicating that the passive allocation part of convertible bonds may gradually complete profit - taking. The positions of institutions such as public funds and insurance companies in the Shanghai and Shenzhen Stock Exchanges have also been adjusted. The trading volume of high - turnover convertible bonds is still at a central level, and the trading has not entered an over - heated stage. Some industries in the consumption and TMT sectors have reached prices above 125 yuan. Whether the liability side will further shift from passive to active remains to be seen, and the key lies in whether the risk preference of the allocation side can increase again during the market trend establishment [5][21]. 4. Investment Strategies - **Option Value Strategy**: It is recommended to focus on new consumption sectors (e.g., Shuiyang Convertible Bond, Xianle Convertible Bond) and technology sectors (e.g., Dinglong Convertible Bond, Jingduan Convertible Bond) [6][28]. - **Absolute Price Strategy**: Bullish on bank varieties (e.g., Industrial Bank Convertible Bond) due to the supply - demand mismatch of convertible bonds, and pay attention to some pharmaceutical varieties with improved fundamentals (e.g., Yirui Convertible Bond, Haoyuan Convertible Bond) [6][28]. - **Theme Trading Strategy**: Pay attention to Huamao Convertible Bond catalyzed by mergers and acquisitions, and strategic sectors related to rare - earth magnetic materials such as Zhenghai Convertible Bond affected by continuous tariff disturbances [6][28].

Report Summary 1. Report Industry Investment Rating The report does not mention the industry investment rating. 2. Core View of the Report - In April, US tariff policies disrupted the market rhythm, but the structural characteristics of the equity market remained. The convertible bond strategy portfolio maintained stable relative returns, with a -1.01% monthly return in April, outperforming the CSI Convertible Bond Index which fell 1.31%. The portfolio achieved stable excess returns relative to the index in the first four months of the year [3][6]. - The resilience of convertible bond valuations continued. At the end of April, the weighted implied volatility of the convertible bond balance in the entire market returned to over 20%. The conversion premium rates in different price ranges were at relatively high levels since 2018. The underlying logic supporting valuations remained unchanged in the second quarter. The advantages in terms of returns and volatility led to a recommended allocation ratio of over 12% for convertible bonds in April [3][17]. - Convertible bonds currently exhibit a "鸡肋" characteristic. The weekly revised potential yield fluctuated between 6 - 8% in April. As of April 30, the revised potential yield was 7.40%. While there is some appeal in terms of absolute returns and the potential for asset bubble - like pricing, the medium - to - long - term risk - return ratio is not attractive. It is recommended to adopt a neutral balanced bond - selection strategy to follow the index performance and wait for market shocks to create better allocation opportunities [3][27]. - When constructing the portfolio, consider reducing the allocation of traditional dividend strategies for underlying stocks, increasing the YTM strategy to reduce portfolio volatility; for high - volatility and low - price balanced bond - selection strategies, increase the selection of technology - growth stocks in May; and pay attention to marginal changes during the earnings period in active bond selection [39]. 3. Summary by Relevant Catalog I. Tariffs Disrupted the April Market Rhythm, but the Structural Characteristics of the Equity Market Remained - In early April, the Trump administration's unexpected tariff policies caused significant fluctuations in global capital markets. A - share markets experienced a sharp decline due to short - term pessimism and liquidity shocks. However, Central Huijin's actions stabilized market liquidity, and the structural characteristics of the equity market continued [6]. - The activity of small - and micro - cap stocks continued, with the North - bound 50 and Science and Technology Innovation 50 indexes performing well. The trading volume of the CSI 2000 and CSI 1000 indexes accounted for nearly 50% of the total market. The style switching in April was less obvious than in December last year, and the traditional calendar effect was not evident [6]. - The convertible bond strategy portfolio maintained stable relative returns. In April, it recorded a -1.01% return, outperforming the CSI Convertible Bond Index which fell 1.31%. The portfolio achieved stable excess returns relative to the index in the first four months of the year [3][6]. II. The Valuation Resilience of the Convertible Bond Market Continued - The resilience of convertible bond valuations continued in April. The weighted implied volatility of the convertible bond balance in the entire market returned to over 20% at the end of April. The conversion premium rates in different price ranges were at relatively high levels since 2018 [3][17]. - The underlying logic supporting valuations remained unchanged. Compared with pure bonds, convertible bonds maintained advantages in terms of returns and volatility. The recommended allocation ratio for convertible bonds remained above 12% in April. Market capital activity also continued, and the issuance of new convertible bonds accelerated in April [17][19]. III. Balanced Strategy to Follow the Index and Wait for Allocation Opportunities Brought by Market Shocks - The "鸡肋" characteristic of convertible bonds can be quantitatively described by the revised potential yield. The weekly revised potential yield fluctuated between 6 - 8% in April, corresponding to a neutral return expectation of 3 - 5% [27]. - The daily revised potential yield can be used to identify short - term trading opportunities and "win - rate." When the daily revised potential yield exceeds 10%, convertible bonds become more attractive. Different ranges of the revised potential yield correspond to different probabilities of positive returns for the CSI Convertible Bond Index in the next year [30][35]. - As of April 30, the convertible bond revised potential yield was 7.40%. It is recommended to adopt a neutral balanced bond - selection strategy to follow the index performance and wait for market shocks to create better allocation opportunities. Potential risks in May include market structural differentiation, convertible bonds resisting price adjustments with premium rates, and adjustments in important weighted convertible bonds [36]. IV. Convertible Bonds to Watch in May - When constructing the portfolio, reduce the allocation of traditional dividend strategies for underlying stocks and increase the YTM strategy to reduce portfolio volatility; for high - volatility and low - price balanced bond - selection strategies, increase the selection of technology - growth stocks; pay attention to marginal changes during the earnings period in active bond selection [39]. - For large - cap bottom - holding bonds, replace some traditional dividend allocations with the YTM strategy. In May, it is recommended to focus on Lvdong Convertible Bonds. For the 1 - 2 - year high - YTM strategy, recommended bonds include Wanqing Convertible Bonds, Jingke Convertible Bonds, Jiayuan Convertible Bonds, and Rongtai Convertible Bonds [40][41]. - For balanced bond - selection, increase the proportion of technology - related stocks. Recommended bonds include Haineng Convertible Bonds, Liang Convertible Bonds, Huazheng Convertible Bonds, and Fengshan Convertible Bonds [42]. - For active bond - selection, pay attention to marginal changes during the earnings period. Recommended bonds include Huayou Convertible Bonds, Shouhua Convertible Bonds, Haopeng Convertible Bonds, and Juxing Convertible Bonds [43].