Huatai Securities: The valuation of domestic convertible bonds continues to be expensive, and it is necessary to guard against strong redemptions and individual bond credit risks in the future.

Huatai Securities stated in the report that the valuation of domestic convertible bonds continues to be relatively expensive, with limited cost-effectiveness. They maintain a neutral outlook on the future market of convertible bonds and recommend investors to maintain a slightly neutral position, while also being cautious of forced redemption risks and credit risks of individual bonds in May and June. Researchers Zhang Jiqiang, Yin Chao, and others stated in the report that the implied volatility of convertible bonds is still at extreme levels, with bond characteristics disappearing and equity characteristics lacking. In addition, the high premium rates of individual bonds at high par prices are still high, and there is also concern about time value erosion caused by the shortening of remaining terms. In an environment with high valuations, a simple combination of stocks and pure bonds significantly outperforms convertible bonds in terms of Sharpe ratio.