Oriental Jin Cheng: Short-term convertible bond allocation still needs to focus on defensive attributes.

On July 14, Orient Securities released a research report stating that with the resurgence of US-Iran conflict, the strengthening of Fed rate hike expectations, and the pressure on the technology narrative, the current theme rotation is fast-paced, and the intense speculative sentiment is expected to continue. The convertible bond market is still expected to be under pressure following the underlying stocks, and short-term allocation of convertible bonds should still focus on defensive properties. In terms of structure, large-cap sectors with strong performance stability are expected to perform better under the demand for risk aversion, and recent contrarian additions to convertible bond ETFs will further amplify the relative advantages of the large-cap convertible bonds. With the acceleration of issuance on the convertible bond end, the expansion of the number of convertible bonds listed marginally and the strong valuation level of new bonds will also provide strong support, making it an important channel for increasing returns. In addition, as the underlying stocks come under pressure, the opportunity to arbitrage the downgrading of convertible bonds with shorter remaining maturities should also be continuously monitored.