On April 8, Panlong convertible bonds were listed for trading, with a maximum increase of 230%; On April 19, aggregate convertible bonds rose by 200% on the first day of listing; On April 21, the first day of listing of Shanshi convertible bonds soared by 120%
In April, the convertible bond market ushered in a rare surge in new bonds. New convertible bonds often increase by more than 30% in a single day, and the increase on the first day of listing is even several times as high.
However, there are obvious traces of hot money speculation behind this sharp rise, and overvaluation is often unsustainable. Many market participants believe that the sharp rise of this wave of new bonds out of valuation is not conducive to establishing a correct investment concept. At the same time, excessive speculation breeds huge risks, and small and medium-sized investors often pay the final bill.
convertible bonds and new bonds hot
In April, A-share new shares broke frequently, and the new family was depressed. However, the new convertible bond market was unconventional, out of a wave of sharp rise, and the increase set a new record again.
The listing of Panlong convertible bonds rose sharply, which has become the fuse of this round of new bond market.
On April 8, Panlong convertible bonds were officially listed. This is a different breed. Panlong convertible bond is the highest convertible value of A-Shares before listing in history. It has reached 254.04 yuan before listing. The positive stock Shanxi Panlong Pharmaceutical Group Limited By Share Ltd(002864) previously achieved 12 trading limits in 15 trading days.
After Panlong convertible bonds were listed, they rose sharply. However, surprisingly, it not only fulfilled the expectations brought by the rise of positive stocks, but also significantly raised its valuation. Driven by funds, the bond reached 338 yuan in April, an increase of 238%.
The huge increase of Panlong convertible bonds was easily realized in just two weeks. With the rise of Panlong’s convertible bonds, a wave of new bond speculation opened: there were significant changes in the convertible bonds such as Tailin and Kabei, which took only seven trading days, from 180 yuan to 514 yuan.
On the 19th, the listing of aggregate convertible bonds once again raised the new bond market to a new height. Aggregate convertible bonds rose by 200% on the first day of listing, reaching a high of 300 yuan. Although the increase fell since then, it still maintained a high of 233 yuan at the close, with a one-day increase of 133%. The next day, aggregate convertible bonds hit a new high again, closing up 10%.
Since then, the new bonds have shown a sharp rise on the first day of listing. On the 21st, the first day of listing of Shanshi convertible bonds rose as high as 120%.
unusual rise
Despite the sudden rise of the new bonds, there are some characteristics to be found.
This round of new convertible bonds rose sharply, including not only the new bonds just listed, but also the new bonds not long after listing. These varieties have increased significantly, far exceeding the previous hype.
For example, the performance of aggregate convertible bonds and mountain rock convertible bonds frequently doubled on the first day, which also set a new record of the highest increase of new bonds on the first day since 2017. In the past hype, such an increase often took many days to achieve.
From the perspective of variety selection, it can be found that the sharp rise varieties are small cap varieties, while the rise of large cap new bonds is obviously weak. The scale balance of the top nine varieties in April was mostly less than 300 million yuan. At the same time, Shanghai stock market varieties are more popular.
Moreover, soaring varieties generally have “incomprehensible” overvalues. Taking Panlong convertible bonds as an example, it closed at 228 yuan last Friday, with a conversion premium rate of 63%. The conversion premium rate of Tailin convertible bonds is as high as 312%, that is, the price of convertible bonds is three times higher than that of regular shares.
Observing these soaring convertible bonds, we can also find the common features: the increase of convertible bonds is significantly better than that of positive stocks, and even the positive stocks weaken significantly.
Data show that none of the nine positive stocks of new bonds with the highest increase in April achieved an increase, all of which were negative returns. Among them, Panlong convertible bonds rose 128% compared with the beginning of the month, but the positive shares Shanxi Panlong Pharmaceutical Group Limited By Share Ltd(002864) fell 40% compared with the beginning of the month; Tailin convertible bond rose 106%, but the positive stock Zhejiangtailin Bioengineering Co.Ltd(300813) .
hot money breakthrough point under market fluctuation
“Behind the sharp rise in new bonds, there is more capital speculation!” Many market participants explained to reporters.
A convertible bond fund manager said that he had paid attention to this phenomenon. He believes that the rise of relevant individual bonds is amazing. Behind this surge is more speculation, and the overvaluation lacks sustainability.
“Although the scale of the whole market is not too large, the sharp rise of new bonds shows that the stratification of investors is obvious. Institutions often buy convertible bonds in the medium and long term, and hot money is reckless.” The above convertible bond fund manager said.
According to the data of Shanghai and Shenzhen Stock Exchange, in the trading of convertible bond market, the trading proportion of natural persons is very high, followed by private placement, while the trading proportion of public funds, insurance, securities companies and other institutions is very low. In March, the turnover of convertible bonds on Shenzhen Stock Exchange totaled 2.2 trillion yuan, of which 1.54 trillion yuan was contributed by natural persons, while private equity funds contributed 480 billion yuan.
However, Chen Yuanfang, a well-known private placement Yingshui investment fund manager, believes that even private placement funds are difficult to adopt this way of speculation. In the depressed market, the low-risk strategy is obviously better.
Zhang Xiaodong, general manager of Guangzhou Siying Asset Management Co., Ltd., said that in this round, only new bonds with small circulation scale soared, and it is not obvious to issue new bonds with large scale. At the same time, this is also related to the six-month sales restriction period of convertible bonds placed by major shareholders.
Due to the provisions that the placement of convertible bonds by major shareholders cannot be reduced within 6 months, which directly leads to the small circulation of many varieties. For example, Panlong convertible bonds, with a scale of 276 million yuan, and 43% of the chips allocated by major shareholders, can not be traded in the short term, so the actual circulation is very low.
On the contrary, once the price of shareholders is reduced, it will have an obvious impact on the market. For example, after liantai convertible bonds announced that major shareholders had reduced their holdings of the allocated convertible bonds in March, the market price continued to weaken, almost halving.
A private placement person told reporters that before the surge of this round of new bonds, “ambush” some positions, but more through “casting a net”. Overall, some gains have been made, but such operations cannot be conducted in large quantities, which is just icing on the cake.
Zuo Dayong, chief analyst of China Industrial Securities Co.Ltd(601377) fixed income, believes in his analysis report on the pricing of new bonds that if the pricing of new bonds is reasonable, institutions will take an active part in the liquidity at the initial stage of listing. As the placing part of major shareholders will be reduced after half a year, it means that the rush to raise funds for listing will significantly push the price of high-tech bonds. In fact, such characteristics also give active funds a more “positive and promising” basis.
He believes that the high pricing and premium after listing will restrict the entry of institutions with medium-term bottom position layout, and active funds have more chips and space to trade and make profits.
hidden risks
The sharp rise out of valuation contains great risks.
Zhang Xiaodong said that the soaring market in April is a way for hot money to find a way out in the weak overall market performance. This kind of operation is to attract hot money to follow suit through soaring to make profits, but it is difficult to last for a long time and is easy to cause sharp rise and fall.
He said that this kind of speculation is essentially chip speculation, and the speculation of warrants completely divorced from value in history is similar.
From the previous rounds of convertible bond speculation, many varieties will not be able to recover the high point without the support of positive stocks. Therefore, many investors will cause losses, which is not conducive to the healthy development of the convertible bond market in the long run. The last payers are often small and medium-sized investors.
After the previous “demon bond” rose again, the convertible bond fell all the way after speculation to 415 yuan, and did not stand at the previous high point until delisting.
“What needs to be vigilant is that in the future, as the market stabilizes and strengthens, such speculation will lose soil.” Zhang Xiaodong said.
According to the latest quarterly report of the fund, many institutions are optimistic about the market of A-Shares in the future.
“Considering that the equity market has entered the stage of high winning rate and high odds in the medium term, it is also relatively optimistic about the convertible bond market. If the valuation does not rise, it may also follow the recovery of the equity market and get out of the rising market.” Liu Wenliang, fund manager of Nanfang Xiyuan convertible bond fund, said. Based on this market judgment, Liu Wenliang appropriately increased his positions in stocks and convertible bonds at the end of the first quarter and actively grasped the market situation in the second and third quarters.
