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nearly 2 billion yuan of funds were involved in the battle, and finally wecan convertible bonds closed at a 20% limit down.

after the opening on september 9, wencan convertible bonds fluctuated and climbed, with the highest intraday increase of nearly 4%. however, since 13:19, the convertible bond changed its early morning upward trend and "changed its face" and went straight down. the convertible bond price fell sharply and hit the 20% limit at 14:01.

the limit down of wencan convertible bonds was unusual. on the same day, wencan shares, the underlying stock of the convertible bonds, fell by 1.52%. market insiders believed that the sudden limit down of wencan convertible bonds was related to the recent continuous rise of the convertible bonds and the obvious deviation of the premium rate from the normal value.

sudden 20% limit down

on september 9, the wecan convertible bond suddenly fell by 20%, and by the end of the day, it was reported at 222.602 yuan, with a total transaction volume of 1.923 billion yuan. on the same day, the underlying stock of the convertible bond, wencan shares, only fell by 1.52%. when the underlying stock did not show obvious fluctuations, the sudden 20% limit drop of the wecan convertible bond attracted the attention of some market investors.

the underlying stock corresponding to the wencan convertible bond is wencan holdings. the company is mainly engaged in the research, development, production and sales of automotive aluminum alloy precision castings. its products are mainly used in the body structure systems, integrated body systems, three-electric systems, chassis systems, braking systems, engine systems, transmission systems and other automotive parts of new energy vehicles and traditional fuel vehicles.

the 2024 semi-annual report disclosed by wencan holdings shows that the company achieved operating income of 3.076 billion yuan in the first half of the year, a year-on-year increase of 20.07%; and achieved a net profit attributable to shareholders of listed companies of 81.8204 million yuan, a year-on-year increase of 488.19%.

it is worth mentioning that despite the fact that its performance has increased several times, the share price of wencan shares has continued to fluctuate, but at the same time, the wencan convertible bonds have attracted the attention of investors. on august 27, the wencan convertible bonds rose by more than 8% on the same day. since then, the convertible bonds have continued to rise. as of september 6, the cumulative increase in just a few trading days exceeded 40%.

the stock price of the underlying stock did not fluctuate much, but the wecan convertible bonds continued to rise, which also caused the conversion premium rate of the convertible bonds to continue to rise. even after today's "20cm" limit down, the conversion premium rate was still 105.17%.

the recent continuous rise of wencan convertible bonds has also attracted the attention of many market "big vs". securities times reporters learned that recently, many market "big vs" mentioned wencan convertible bonds when commenting on the convertible bond market. in the stock forum, reporters saw that many investors also questioned whether there was a market maker's manipulation of the convertible bonds.

in fact, the wecan convertible bond is not an isolated case. recently, there have been many "demon bonds" like the wecan convertible bond that suddenly crashed. for example, the shangrong convertible bond also experienced a series of sharp rises in the early stage, but then suddenly crashed. tongguang convertible bonds and yili convertible bonds also experienced similar trends.

some market insiders said that the speculation of this type of "monster bonds" is similar to a "pig killing scheme", where funds speculate on small-cap convertible bonds and then pull them up to a high level and suddenly drop them.

the convertible bond market is recovering overall

although the a-share market has continued to decline recently, the convertible bond market has rebounded.

as for the reason for the recent recovery of the convertible bond market, cicc believes that the core change is the structure of the underlying stocks - small and medium-sized stocks are gradually recovering. recently, small-cap and growth styles have become dominant, which obviously helps convertible bonds more than large-cap value styles. if the market takes this as a turning point, the key factor is still the direction of the underlying stocks, rather than low valuations or credit relief.

looking ahead to the market, citic securities' research viewpoint said that after the early adjustment in july and august, the convertible bond market has greatly improved its absorption rate of equity fluctuations. if there is a subsequent adjustment at the shanghai composite index level, convertible bonds with a small-cap style may benefit instead; if equity maintains a small fluctuation, some short-term bond-oriented products will also have opportunities for absolute returns. citic securities said that at the same time, the inflow of convertible bond etfs has not declined, which indirectly reflects the enthusiasm of market funds to participate, but institutions are generally still cautious about the liquidity risks of individual bonds.

hua xi securities believes that against the backdrop of weakening stock prices and expected fluctuations in pure bond prices, the current risk-return characteristics of the convertible bond market have become extremely clear - the advantage lies in the historical odds and cost-effectiveness, while the weakness lies in the volatility that is difficult to effectively control.

based on the background of yield shortage, huaxi securities said that it has no doubt about the valuation recovery of the convertible bond market in the future. for institutions with stable liabilities, the static income of the current convertible bond market is already worth investing in. however, for products that are sensitive to fluctuations in liabilities, it is more recommended to participate in the bottom-position varieties of the market and the mainstream white horse varieties that have fallen to the bottom of the bond. in the future, a large increase in positions and allocations still needs to wait for the right signal of the underlying stock.