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interpretation: the wencan convertible bond is not an isolated case. in recent years, speculation on "demon bonds" has frequently occurred. for example, shangrong convertible bonds also experienced a series of sharp rises in the early stage, but then suddenly crashed. tongguang convertible bonds and yili convertible bonds have also experienced similar trends.

analyze: the emergence of these "demon bonds" is similar to a "pig killing scheme", where funds speculate on small-cap convertible bonds and then pull them to a high level and suddenly drop them.

market recovery and convertible bond market: although the a-share market has continued to decline recently, the convertible bond market has rebounded. 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, and their help to convertible bonds is obviously higher than that of 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.

outlook: according to the research opinion of citic securities, the convertible bond market has undergone an early adjustment in july and august, and its absorption rate of equity fluctuations has greatly increased. 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 debt-oriented products will also have opportunities for absolute returns. huaxi securities believes that the current risk-return characteristics of the convertible bond market are also very clear - the advantage lies in the historical odds and cost-effectiveness, and the weakness lies in the volatility that is difficult to effectively control.

investment strategy: 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 on the liability side, 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.