This newspaper (chinatimesnet.CN) reporter Hu Jinhua reports from Shanghai.
The performance of the capital market in 2023 will be poor, with losses of varying degrees in both ** and ** investments, while the convertible bond market, with a scale of more than 850 billion yuan, will perform well, especially a number of quantitative investment institutions have made a lot of money for customers in convertible bond transactions.
Convertible bonds, as an equity asset with debt base protection, are affected by both the ** and the bond market. In the long run, the performance of convertible bonds is mostly between stocks and bonds. Last year, the China Bond Index was 048%, equal weight index **056%, the overall performance of the quantitative convertible bond industry is much more stable than **, and the pre-fee income of our company's similar products is close to 10%, in the weak market, quantitative convertible bond assets can be said to provide investors with a new investment opportunity. Xu Jiaying, general manager of Shanghai Qianfulai Asset Management Co., Ltd., which focuses on convertible bond investment, told the China Times.
It is worth mentioning that since the beginning of the year, various institutions and high-net-worth individuals have set their sights on the convertible bond market, and this year they are ready to allocate more assets to this field.
Generally, the investment threshold for private equity products is from one million yuan, but I personally feel that with the improvement of the market, the target of convertible bonds is very likely to have investment opportunities with the recovery of the underlying stock, so I subscribed to the products of related companies. On March 1, Cheng Hong (pseudonym), a high-net-worth person in Shanghai, revealed to this reporter.
The yield on convertible bonds is considerable
In the eyes of industry insiders, the income of pure bonds and quantitative private convertible bond products offered by the public offering last year can bring investors a yield of as little as 5 points and as much as more than 10%.
According to wind data, the Wind Convertible Bond Equal Weight Index will be slightly **1 throughout 202309%, which is stronger than the Shanghai Composite Index 278%**, much higher than the Shenzhen Component Index of 1262% of the pullback.
The convertible bond market performed strongly throughout the year, although affected by the relevant underlying stocks, but the convertible bonds with certain bond attributes resisted significantly, such as the public offering of convertible bonds** to 15The 06% yield is the best performing pure bond** of the year and one of the few convertible bonds with a positive yield**. In the short term, since most of the investment returns in the past two years have been negative, the 'rights' have become a drag, and the returns are poor. The returns of the mixed secondary bonds and partial debt mixed index, which accounts for a relatively high proportion, have been negative in the past 1 year and the past 2 years, which has just become the fatal wound of the mixed base, and some pure bonds** have become the biggest winners of the year. On March 1, Zhou Qianlong, an analyst of public bond investment strategy in Shanghai, said in an interview.
In the private quantitative convertible bond investment market, many products brought positive returns to investors at the end of last year.
We took advantage of some of the market opportunities in the last year and achieved a certain level of return on investment. However, we also need to focus on some areas that need to be improved. One of them is risk management, especially in the face of large fluctuations in the A** market, a more stringent risk control mechanism is particularly crucial. We should take a deep look at our risk management processes to ensure that we can make quick and effective decisions in extreme market situations to protect the interests of investors to the greatest extent. In addition, companies need to be more innovative and adaptable. The convertible bond market is complex and dynamic, and changing market conditions require companies to be flexible in adjusting their investment strategies. Introducing more innovative elements, such as more accurate quantitative models or more flexible trading strategies, can help improve the company's competitiveness in the market. Xu Jiaying said in an interview.
Due to the strong "resistance" of the convertible bond market last year, it has attracted the attention of all kinds of investors this year, and in addition to high-net-worth customers, insurance asset management institutions have also begun to increase their layout.
We will increase our investment in the bond market this year, and convertible bonds as a sub-segment, the steady performance of the past two years has entered our asset allocation basket. Specifically, we will disperse a part of the funds and hand them over to more professional institutions to manage, and we are expected to obtain an annualized return of about 8%. On March 2, the head of investment of an insurance asset management institution in Shanghai revealed in an interview.
Xu Jiaying is also optimistic about the entry of incremental funds into the convertible bond market.
As a relatively low-risk, 'guaranteed bottom, no upper limit' investment tool, convertible bonds have the dual characteristics of fixed income and value-added, in the case of large market volatility, investors are often more inclined to seek relatively stable assets, which is expected to attract more funds into the convertible bond market; At the same time, with the economic recovery and changes in the interest rate environment, the convertible bond index has performed well compared with other broad-based indexes, showing relatively high returns, and high-net-worth clients and institutional investors usually seek to diversify their portfolios, and the yield advantage of convertible bonds may become an important factor in attracting funds. Xu Jiaying further pointed out.
Under the multiple benefits, it is expected to usher in a "big year".
* The market has come out of the "trough", which may prompt the convertible bond market to usher in a "big year".
According to market analysts, the first A-share market in 2024 will be mainly affected by two aspects at home and abroad: the main influencing factor on the domestic side is liquidity, and at the macro level, the central bank's open market continued to be the most liquid at the beginning of the year, with a cumulative net withdrawal of more than 2 trillion yuan, and the marginal tightening of the capital side; The main influencing factor overseas is interest rates, the U.S. economy, employment and other data in December 2024 are still strong, once again exceeding market expectations, coupled with the hawkish statement of the Federal Reserve's interest rate meeting, the market's previous overly optimistic expectations have changed, and the probability of the Fed starting to cut interest rates in March has dropped to 70%. This also led to a recovery in the U.S. dollar index and U.S. Treasury yields, which were in the early stage.
For quantitative, no matter how advanced the quantitative model is, it is difficult to ** the instantaneous fluctuations and irrational behavior of the market, and extreme market conditions will cause the market to deviate from the quantitative model expectations, resulting in a drawdown. The volatility caused by a short-term liquidity crisis does not necessarily reflect the true value of assets, such as the wave in early 2024**. This round of grinding of China's equity assets is the full release of macro market risks for domestic investors, and the current low valuation has reached the point where there is no way to fall. Xu Jiaying said.
From the regulatory perspective, the adjustment of regulatory leadership and the strengthening of supervision will help improve market transparency and investor confidence, and reduce uncertainties. Second, the standardized market environment will help attract more long-term value investment funds into the market and promote the further expansion of the equity market, including the scale of the convertible bond market. This positive change is conducive to increasing investment opportunities for quantitative convertible bond private equity firms with the expansion of both trading volume and scale of the market, which is conducive to improving investment returns.
As two important ways of refinancing, debt conversion and private placement have a mutually substitution effect, and the scale also shows a reverse change relationship. Compared with the fixed increase, the convertible bond has its unique advantages, which is about 1The low issuance rate of 3% is low, which is 05 percentage points; The second debt-to-equity swap cycle is about 6 years, and the dilution of equity capital is slow, and the fixed increase is a one-time dilution of the equity of major shareholders; Thirdly, convertible bonds are public offerings, which are convenient to issue and have a low abandonment rate, while private placement is a private placement product, and the difficulty and convenience of issuance are not as good as those of convertible bonds. Direct financing will bring a lot of capital and attention to the convertible bond market. When talking about the prospects of convertible bonds, Zhou Qianlong told this reporter.
It is worth mentioning that this year, due to the fact that some leading quantitative institutions have used the system to carry out short-selling transactions of refinancing bonds, the capital market has fluctuated significantly, and the quantitative industry is also under unprecedented pressure.
In this regard, Xu Jiaying said frankly that the regulators have increased the supervision of the entire quantitative industry to ensure the fairness and transparency of the market, which may indeed lead to some adjustments to the quantitative trading strategies in the market to meet more stringent regulatory standards. For quantitative traders in the convertible bond market, there is a need to pay more attention to compliance to ensure that trading activities comply with regulatory and regulatory requirements. As far as the current regulatory provisions are concerned, they have not had much impact on the industry, and the benefits generally outweigh the disadvantages.
In the entire quantitative industry, jointly promoting the healthy and benign development of the investment market requires the joint efforts of all practitioners. For regulators, it is important to designate regulatory requirements that are in line with the market environment from the perspective of both investors and managers. Ensure that trading activities are legal and transparent, with the aim of building market trust and reducing misconduct. For quantitative traders, more scientific and effective risk management measures should be adopted to ensure that the portfolio can be well protected when the market is volatile. This includes careful testing and monitoring of trading algorithms, as well as timely adjustment of strategies to adapt to market changes. For all practitioners, quantitative practitioners should recognize their importance in the market and assume social responsibility. Actively participating in social activities such as investor education and paying attention to the overall stability and development of the market will help establish a good industry ecology. Xu Jiaying said.
Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia.