CSC(601066) 中信证券经纪(香港)·2024-06-14 07:10Summary of Conference Call on Convertible Bonds Market Industry Overview - The conference call focuses on the convertible bonds market in China for the first half of 2024, highlighting its performance and outlook amidst macroeconomic conditions and regulatory changes [1][2]. Key Points and Arguments Market Phases - The convertible bonds market experienced three main phases in the first half of 2024: 1. Phase 1 (January to Early February): Significant decline due to slow economic recovery, tight market liquidity, and severe pessimism, leading to a notable downturn in the equity market [2]. 2. Phase 2 (Early February Onwards): Regulatory policies improved micro liquidity in the equity market, resulting in a rebound in the convertible bonds market and a valuation recovery [2]. 3. Phase 3 (From Late April): Real estate-related news propelled the equity market upward, but the bond market faced some pressure; however, the demand for convertible bonds remained strong [2]. Market Performance - The market showed a polarized performance: - The China Convertible Bond Index rose by 2.67 percentage points, while the equal-weighted convertible bond index fell by 1 percentage point [3]. - Small-cap convertible bonds faced increased credit risk concerns due to structural products and regulatory impacts [3]. - Growth sectors like TMT (Technology, Media, Telecommunications) and pharmaceuticals underperformed, while large-cycle industries like metals, oil, petrochemicals, and transportation performed well but still lagged behind the overall industry [3]. Outlook for H2 2024 - The convertible bonds market is expected to see a valuation uplift, as current valuations are at a relatively low historical level, with many low-quality bonds at the bottom of their range [3]. - Economic recovery expectations and a moderate increase in risk appetite are anticipated to support the market, with a focus on "double low" styles and industry beta stocks potentially performing better [3]. Economic and Financial Environment Expectations - Economic recovery in the second half of 2024 is expected to show some resilience, with institutional allocations and policy expectations contributing to a stronger overall outlook [3]. - The bond market is projected to experience a weak oscillating trend due to slow government bond supply in the first half and anticipated acceleration in special bond issuance in the second half, alongside potential supply pressures from special treasury bonds [3]. Equity Market Insights - The equity market is likely to present a strong oscillating trend, characterized by structural market conditions: - Recent upward movements lack sustained momentum post-recovery in the first half [3]. - The upcoming July Central Committee meeting may provide direction for the economy, potentially boosting the market [3]. - Factors such as Federal Reserve interest rate cuts, geopolitical risks, and the U.S. elections may increase market volatility [3]. - Investment recommendations include: - Short-term focus on high-dividend sectors like power utilities. - Mid-term recommendations for resilient cyclical products like gold and upstream resources. - Long-term focus on growth sectors such as electronics and pharmaceuticals, while being cautious of their impact on high-dividend sectors [3].