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Original title: Ongoing “fusible wave” of convertible bonds, experts remind investors not to blindly follow the trend and chase highs. Source: China Economic Net
Convertible Bond “Fuse Wave” Continues, Experts Remind Investors Not To Blindly Follow Their Lead
Our reporter Zhu Baochen
On the afternoon of October 23, Wang Bei (pseudonym), a Beijing investor, re-signed the “Risk Disclosure Statement for Convertible Corporate Bonds Issued for Unspecified Purposes” (hereinafter “Risk Disclosure Statement “) through the application of an account opening brokerage firm. “).
On the same day, he received a short message from the sales department stating that, in accordance with the relevant requirements, investors must re-sign the “Risk Disclosure Letter” before October 26, 2020. If he does not sign, the A securities company will not accept your subscription or purchase order, and investors who already own the relevant convertible bonds may choose to continue to hold, convert, resell, or sell.
Wang Bei is a senior investor. However, it was only in the second half of last year that it began to participate in the convertible bond renewal. He told the “Securities Daily” reporter that as long as there is a new convertible bond issue, he will participate in the new market. “I have been signed several times this year and all were sold on the day of listing.”
“I’ve been creating new ones, four or five times in about two years,” Mr. Jin, a Shanghai investor, told a reporter for the Securities Daily.
Similar to Wang Bei’s operation, after each win, Mr. Jin also sold on the trading day. “In the past, convertible bonds were sold on the day they were listed and could earn 300 yuan at a time, but then more than 100 yuan was returned. The most recent was only tens of yuan.
However, compared to the rationality of Wang Bei and Jin, convertible bonds have been speculated repeatedly this year, prices have fluctuated sharply, and the trading volume and turnover rate of some convertible bonds have skyrocketed. On October 26, the “fuse” of convertible bonds continued. By morning, a large number of convertible bonds had risen to 10% during the call auction period. After the market opened, they went straight to 20% to activate the “fuse”. Within two minutes of opening, many convertible bonds were up 20% and were temporarily suspended. However, in the afternoon, the trend diverged for a time, and some varieties of convertible bonds appeared as “down” circuit breakers, such asSmart convertible debtIn the morning, it went up 20% and stopped at 20% in the afternoon.
Kaiyuan Securities chief fixed income analyst Yang Weiyu told the “Securities Daily” reporter that this round of convertible bond speculation is mainly due to a lack of investment in the stock market and abundant funding. Some dormant funds depend on hot topics. The influx of convertible bonds with T + 0 trading and no price cap into the market, holding groups boosted convertible bonds on a small scale.
China valuesConvertible bond analyst Gu Wei told the Securities Daily reporter that the reason is mainly due to the fact that many convertible bonds have small existing balances and are easy-to-use funds to promote speculation. The lower limit of the limit is more conducive to the operation of hedge funds.
In fact, in the first half of this year there was a group of similar capital speculations related to the topic. Based on the successful experience of the first half of the year, the number and scale of convertible bonds increased significantly this time, indicating that they entered the convertible bond market and speculated. The amount of funds is increasing, “Gu Wei said.
Under violent speculation, the transaction price of individual convertible bonds seriously deviated from the company’s share price, and regulatory authorities had to make multiple moves. On October 23, the China Securities Regulatory Commission publicly requested opinions on “Administrative Measures for Convertible Corporate Bonds (Draft for Comments).” On the same day, the Shanghai and Shenzhen Stock Exchange announced that the Shanghai Stock Exchange said it would include convertible bond transactions in the key monitoring; The Shenzhen Stock Exchange said it would include abnormal changes in convertible bonds in key monitoring and take timely regulatory action against abnormal transactions.
Gu Wei said that for this kind of behavior that deviates from fundamentals and speculates seriously disrupts the normal market order and increases the risk of volatility for normal convertible bond investors. If a strong redemption is triggered, it will be against the small ones. and midsize investors who blindly follow suit. The loss is even more uncontrollable, so the supervision will surely introduce some measures to strengthen the management.
Under the explosion, investors must be rational. Yang Weizhen said that the current increase in some convertible bonds has seriously deviated from the company’s fundamentals and that this divorce will eventually return. Given the lessons of convertible bond speculation in March this year, investors should still pay attention to the related risks.
Gu Wei said that because some crazy convertible bonds are basically separated from the fundamentals and the normal value of convertible bonds, it depends more on the willingness to manipulate the funds. Investors are advised not to blindly follow the trend and pursue the trend. objective of said convertible bonds. (Daily values)
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