[ad_1]
Original Caption: Hot Money Small Cap Convertible Bond Hunt Sparked ‘Fuse Wave’
□ reporter Luo Han
On October 20, a batch of convertible bonds in the Shanghai and Shenzhen markets had surged excessively, which in turn triggered an intraday hold mechanism. According to statistics, there were a total of 11 convertible bonds that activated the “fuse” that day, of which 5 were activated twice. The Shanghai and Shenzhen Stock Exchanges issued a total of 16 announcements regarding the temporary suspension of trading in convertible bonds. However, most bonds fell after the resumption of trading, and only two convertible bonds on the market closed higher than 20%. A China Securities News reporter noted that most “fusible” convertible bonds were accompanied by an abnormal increase in the turnover rate, and most of the trend deviated from the underlying stocks, and the premium rate of conversion also increased dramatically. All this indicates the risk of price fluctuations caused by capital speculation.
11 convertible bonds activated “fuse”
On the morning of the 20th, the Shanghai Composite Index was still in shock, but the convertible bond market began to generate a “wave of fuses.” The Shenglu Convertible Bonds were the first to activate the “fuse”, followed by the Yokogawa Convertible Bonds and the Landun Convertible Bonds. Shortly after the resumption of trading in Shenglu convertible bonds, the “circuit breaker” was activated twice, and Yokogawa convertible bonds and Landun convertible bonds also “followed the trend.” Not only that, Kailong convertible bonds, molded convertible bonds, Wanli convertible bonds, and broadcasting and television convertible bonds have soared 20% one after another and were temporarily suspended. A total of 7 convertible bonds triggered the provisional stop mechanism in the morning, and 3 of them triggered twice.
In the morning, the remaining temperature was not over, and in the afternoon, convertible bonds joined the “wave of fuses.” Baihe’s convertible bonds were the first to “hit the line,” and the “fuse” was activated twice within a minute after operations resumed. Subsequently, Tongguang convertible bonds, Jiuzhou convertible bonds and Aihua convertible bonds were also temporarily suspended due to their rises or more than 20%. Molded convertible bonds triggered the second “fuse” of the day.
Most of the convertible bonds that triggered the “fuse” that day eventually gave up some of their gains. For example, after the second resumption of Shenglu convertible bond trading, they rose more than 60%, but the closing rate was 32.29%; Yokogawa convertible bonds rose nearly 50% in the morning and were up 15.56% during the day. At the close, only two convertible bonds on the Shanghai and Shenzhen stock markets have risen more than 20%.
Small-cap convertible bonds were “fired”
The “wave of fuses” has come and gone, reflecting the mentality behind short-term capital speculation. The very high turnover rate of some convertible bonds highlights this point. Wind data shows that on the 20th, the conversion rate of Landun convertible bonds and Shenglu convertible bonds exceeded 3000%, and the conversion rate of Wanli convertible bonds exceeded 2000%. Yokogawa Convertible Bonds, Chiron Convertible Bonds, Tongguang Convertible Bonds and Trim The conversion rate for convertible bonds and radio and television convertible bonds is over 1,000%. The conversion rates of the Jiuzhou Convertible Bonds and the Baihe Convertible Bonds were 691% and 351%, respectively.
At the same time, the aforementioned convertible bond trend may be exhausted. Shenglu Communication opened lower, closing 1.46%; Molding Technology closed only 1.61%; Yokogawa convertible bonds “merged” twice during the session, and its Yokogawa Mold shares closed up 7.54%; Blue Shield shares were anticipated. The increase was as high as 14.49% during the period, but has since receded and closed only 1.72% higher. At closing, the convertible bond conversion premium rate for the day has increased compared to the previous day.
Also, the common point of the aforementioned convertible bonds is that the balance is small. If the remaining amount of convertible bonds in the entire market is ranked from highest to lowest, the convertible bonds listed above are all in the bottom 20%. Among them, most convertible bonds have a balance of less than 100 million yuan, while Kailong convertible bonds and Yokogawa convertible bonds only have more than 30 million yuan.
High turnover rate, deviating from underlying stocks and small balances, these characteristics point to the driving force behind the “wave of fuses” or hot money that is excited about small cap convertible bonds. At the time of publication of the China Securities Journal reporter, Blue Shield Co., Ltd., Shenglu Communication, etc. have issued an advisory on the risk of fluctuations in convertible bond trading, indicating that the abnormal fluctuation of convertible bonds are mainly due to the influence of market funds.
Regulatory authorities have repeatedly fired
Due to the implementation of the “T + 0” trading system, with no price limit and with a large number of individual investors, convertible bonds are often the subject of speculative capital.
In March this year, due to the boom in pharmaceutical stocks, pharmaceutical convertible bonds, especially masks, rose strongly. At the time, there were funds to “fish in troubled waters,” on the one hand, they overvalued certain convertible medical bonds and, on the other, they focused on low-cap, low-priced bonds. Once the excitement from the pharmaceutical sector wore off, hedge funds made a fuss right over some low-priced, small-cap coupons that weren’t backed by performance.
To curb the irrational volatility in the convertible bond market, the regulatory authorities have taken several actions. As of June 8, the Shenzhen Stock Exchange began to implement measures of temporary suspension of the trading of convertible bonds, if the trading price of convertible bonds increases or decreases by more than (inclusive) 20% or 30% from the previous closing price, trading will be suspended for half an hour. After the implementation of the new Shenzhen Stock Exchange regulations, traces of capital speculation are more likely to be “exposed” and give non-professional investors more time to think calmly.
In addition to disclosing abnormal business risks and modifying business rules in daily regulatory developments, the Shanghai and Shenzhen Stock Exchange issued a notice in July, requesting investors to engage in the underwriting and trading of convertible bonds issued for non-purposes. specified on paper or electronically. Sign the “Investment Risk Disclosure of Convertible Corporate Bonds Issued for Unspecified Purposes”, and the notice will be implemented on October 26, 2020. All these risk disclosure documents include clauses that remind of fluctuations in bond prices Convertibles: Convertible bonds are subject to reversal operations on the same day, and there is no up or down limit, and the listing price can fluctuate significantly.
