In the context of the continuous recovery of the A-share market, investment sentiment in the convertible bond market continues to rise.

According to Wind data, the CSI convertible bond index has risen for seven consecutive trading days since April 24, and continues to set new highs for the year. Since February 6 this year, the CSI convertible bond index has risen nearly 8%, although it has lost.SplinterlandshiveIn the same period, the overall market, but the current convertible bond market sentiment significantly improved, since May, has been two consecutive trading days turnover of more than 55 billion yuan. In terms of trading volume, there was a turnover of about 4% on May 7.Splinterlandshive.22 billion convertible bonds, a new record for the year.

Market analysts pointed out that with the landing of the new "National Nine articles" and the basic end of the company's financial reporting window, market style switching and differentiation fluctuations have gradually weakened, market fundamentals have strong certainty, and the market risk preference has been enhanced by waiting for funds or entering the market in the early stage. at the same time, many real estate policies are optimized and northward capital flows back, and market sentiment is expected to further boost.

The volume of CSB convertible bond index hit a new high.

On May 7, the A-share market continued to fluctuate, and the performance of the convertible bond market outperformed the market, indicating a marked increase in investment sentiment in the convertible bond market. As of the close, the CSB convertible bond index closed up 0.38%, the Shanghai Composite Index closed up 0.22%, and the Shenzhen Composite Index closed down 0.08%.

It is worth mentioning that the CSI convertible bond index has closed up for seven consecutive trading days since April 24, with a cumulative increase of 2.70%, compared with a 4.16% rise in the market over the same period. Since February 6 this year, the CSI convertible bond index has risen 7.81 per cent, while the market has risen 16.49 per cent over the same period.

After this round of repair, what is the current valuation of the convertible bond market? From the perspective of conversion premium, Wind data show that among the 534 normally traded convertible bonds, the conversion premium rate is negative only 4 convertible bonds such as Jindan convertible bonds, Jinpan convertible bonds, Jiudan Zhuan 02 and Bosch convertible bonds. After the convertible bonds are converted into shares, the stock value will be higher than the convertible bond price. The rest of the convertible bond-to-equity premium rate is positive, which means that the vast majority of convertible bond prices have a certain overvalued premium. Among them, 39 of them have a low premium rate of convertible debt to equity, no more than 10%, or at a low valuation.

In terms of specific individual bonds, Zhengdan convertible bonds have increased by 176% this year while the underlying stocks have continued to soar. On the evening of May 6, Zhengdan Technology announced that the recent trading prices of the company's shares and convertible bonds have fluctuated greatly, and in order to protect the interests of investors, the company will suspend trading to check the abnormal fluctuations in recent stock and convertible bond trading. Zhengdan shares previously issued a stock price change notice, the company's main product trimellitic anhydride market prices rose by a large margin, but the sustainability of product price fluctuations is uncertain.

For the recent performance of the convertible bond market, Huachuang Securities analyst Zhou Guannan believes that it is mainly because the equity market continues to pick up. From the perspective of economic fundamentals, the economic data in the first quarter reflect that the economy is indeed repairing in 2024, while in April, the manufacturing PMI has been higher than the boom and bust line for two consecutive months, and the production side is structurally strong, new orders are not weak, and price increases are transmitted more smoothly.

From a policy point of view, special treasury bonds and special bonds may accelerate in the second quarter, and the growth rate of infrastructure investment is expected to continue to improve; there have also been more positive new changes in the expression of real estate, and we can pay attention to the effectiveness of local policies after landing in the future.

From the capital point of view, northward capital continued to flow rapidly at the end of April, or it reflects a series of previous equity market support measures, positive changes expressed at the "430" Politburo meeting, a more stable RMB exchange rate, amplified fluctuations in the peripheral equity market, A-shares and Hong Kong stocks after the adjusted valuation is attractive, and other factors continue to attract foreign investment.

From an emotional point of view, after the performance disclosure period in April, concerns about both performance and delisting risks are expected to ease gradually, and those with strong texture or improved fundamentals after May may have a clearer chance of repair as risk appetite recovers.

How to go in the future of the convertible bond market?

Under the circumstances that the valuation of the convertible bond market has been obviously repaired, the scope of concern about the credit risk of the main body of convertible bonds has been expanded under the influence of policies such as strict delisting standards. Recently, some stocks have been delisted risk warning or other risk warning, related convertible bonds have plummeted, or even fell below face value.

Looking forward to the future, a number of institutions expect that the room for further rise in the convertible bond market is relatively limited, and the market differentiation still continues. Minsheng Securities believes that the low conversion value and high conversion premium rate in the current convertible bond market limit the ability of convertible bonds to keep up to a large extent.

Huachuang Securities also said that the valuation of convertible bonds has been greatly repaired since the beginning of February, but considering changes in capital supply and demand and changes in term structure in the convertible bond market, it is difficult to return to the average level of 2022-2023, and the 23% premium rate of 100 yuan is not low.

According to the research view of Tianfeng Securities, based on the market preference for blue chip stocks after the introduction of the new "National Nine articles," in May, combined with the disclosure results of the annual report, the trade-in and equipment renewal policy, low-altitude economy, AI, going to sea and other clues can be actively arranged in the balanced target. In addition, under the strong guidance of the policy, the company's willingness to pay dividends is enhanced, and it is suggested that we should pay attention to the target of the increase in the dividend ratio based on the 2023 annual report dividend plan.

At the same time, Tianfeng Securities also reminded investors that some large amounts of convertible bonds fell below the face value of convertible bonds under the pressure of capital reduction and settlement, and the company can evade convertible debt settlement by raising the price of convertible bonds to more than 100 yuan, but at the same time, it may also accelerate the fermentation of some of the underlying credit risk.

Zheshang Securities has different views on the convertible bond market. Zheshang Securities believes that the optimistic market of convertible bonds is expected to continue. With the May pricing core turning to growth, or the possibility of rebalancing pricing, the valuation of the convertible bond market is expected to continue to rise, especially the valuation of small and medium-sized convertible bonds is expected to rise more smoothly.

Editor: Wan Jian