Crazy Convertible Bonds: Regulatory Overweight, Hype Still Wait For "Safe Time".

Convertible bond new stock appears to be on the first day of listing.

In April 27th, the first day of the listing of China's convertible bonds opened up to 23.55% to mid day suspension, and eventually closed up 18.78% in the afternoon. On the same day, the CSI bond index rose by 0.28%, and the 6 convertible bonds, such as molded bonds and radio and television debt, rose by more than 10%.

"Although the regulatory authorities have been able to regulate the phenomenon of convertible bonds speculation, the overall performance of the market has dropped somewhat. Most of the recent convertible bonds in the market are generally in the main direction of investment, such as medicine, food and beverage, infrastructure and so on. Beijing, a large public fund fixed income director said.

Although public funds generally increased convertible bonds in the first quarter, some agencies believed that convertible bonds had lower performance price ratio and had to wait for safe allocation.

Speculation is still in existence.

Since March, when regulators have strictly controlled the abnormal trading of convertible bonds, the bond market has cooled down.

In twenty-first Century, according to Wind data, according to the data compiled by the economic news reporter in April, the average increase of 19 convertible bonds newly listed on the first day of listing was 16.32% in April, which was nearly 6 percentage points lower than that in March.

However, the speculation atmosphere behind individual bonds has not ceased.

For example, the Henghe convertible bonds, which were named by regulators before, rose 11.19% in April 27th, and the premium rate was 355.45%, while the corresponding stock Henghe mold fell 2.21% on that day.

In fact, before the Henghe mold stocks and Henghe convertible bonds have applied for suspension verification, the company also issued a risk warning notice several times, pointed out that the Henghe convertible bonds fluctuated, investors should pay attention to the two level market trading risk.

"Recently, some of the smaller stock coupons in the market are very volatile. They often deviate from the positive stocks, have a high turnover rate, and have strong speculation. This is probably part of the fund's T+0 trading mechanism for convertible bonds, choosing a small scale and positive stocks may be the subject of the topic, and go under the frenzied short term trading hype." A public fund receiver in Southern China said.

"This hype which is seriously divorced from the real value is short and will eventually return to the source of value. It is suggested that investors avoid such a coupon transaction. The risk and income do not match well. From the perspective of risk, investors are advised to pay attention to the risk of high coupon with high absolute price and high premium rate." The source pointed out.

Waiting for "safe time"

With the attraction of convertible bonds, the public offering funds generally converted into bonds in the first quarter.

Guotai Junan data show that in the first quarter of 2020, the total value of convertible bonds held by public funds was 109 billion 800 million yuan, an increase of 17.03%. From the perspective of position, the current scale of stock conversion is more than 500 billion yuan, and the proportion of public fund convertible bonds is about 20%.

However, because the overall valuation level of the current convertible bonds is at a high level, the public offering placement convertible bonds also reflect the defensive nature, increasing the allocation of the undervalued convertible bonds.

Data show that in the first quarter of this year, the three largest coupons in the public offering fund were 17 Bao Wu EB, 18 Zhongyou EB and 17 PetroChina EB, the largest three of which were reduced to G, Three Gorges EB1, Shun Feng convertible bonds and Zhongding convertible to 2.

Guotai Junan studies believe that in the first quarter of the stock market fluctuations in the context of large fluctuations, the main public offering funds at the higher end of the bond raising public debt and the absolute price is in a low position of bank bonds, more varieties are mainly for some liquidity better market leader convertible bonds and short-term increase too large variety.

Data show that the CSI bond index rose 0.15%, 2.01% in January and February this year, and reached a new high at the end of February, until March.

"Our overall two tier debt base's main allocation strategy is to buy a convertible bond with a higher margin of security, that is, a higher debt, and has a certain flexibility to sell the convertible bonds which are close to the early redemption. In this way, it is expected to control the withdrawal and share the gains of the stock more safely. " Zheng Meng, vice president of the fixed income fund of Founder Fubang fund, said.

Specific to the trading strategy, Zheng Meng said, "one is the kind of positive equity investment, the other is the game of clauses. The positive equity investment mainly seeks for the growth value of the industry and related quality companies, taking into account the top-down and bottom-up, and investing in highly priced coupons at a certain absolute price and investing in the positive stocks through the purchase of the convertible bonds; the terms game is based on the terms of the lower clause to choose the securities that are approaching the selling period or the payment period and under the pressure of lower repair, or investment has not yet been transferred. High discount brokerage stocks.

Wei Fengchun, chief macroeconomic strategist at the time fund, said: "convertible bonds are still at a low level, and they still need to wait for the safe allocation."

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