Analysis Of Economics Convertible Bonds Known As "Capital Guaranteed Stocks"

There is an investment in the Chinese market. The probability of making a profit is almost 99%, and the bottom 100% is guaranteed. Even if the stock market cuts, it can get back the principal plus interest, but almost no caps, and it can enjoy the huge profits brought by the bull market. This variety is convertible bond.

Question 1: what is convertible bond?

Convertible bonds are a type of bond that can be converted into a bond issuing company. shares It usually has a lower coupon rate. In essence, convertible bonds attach an option on the basis of issuing corporate bonds, and allow purchasers to convert the bonds they purchased into the shares of designated companies within the specified time limit.

Convertible bonds have stocks and bond When the share price goes up, investors can convert it into shares and enjoy the profits brought by the stock price rise. When the share price falls, it can not enjoy the fixed interest income of the conversion and enjoy the repayment of principal when the stock price is expired. Convertible bonds do not cover the top, and they can guarantee the bottom, so they are called "stocks with principal guarantees". Simply put: convertible bonds can be converted into stocks in bull market, waiting for stock prices to rise; convertible bonds in bear market are bonds, which will repay principal and interest at maturity. No matter how bad the stock market falls, you don't have to worry about losing the principal. For investors, convertible bonds are an ideal investment tool with consideration of income and risk.

Question 2: how to trade convertible bonds?

As long as investors who have already been able to deal with Shanghai and Shenzhen stock exchanges do not need to go through any formalities, they can directly buy and sell convertible bonds. Investors can also participate in convertible bonds through several channels:

First, like the purchase of new shares, direct purchase of convertible bonds. In the specific operation, input the code, price and quantity of the convertible bonds separately, and finally confirm it. The denomination of convertible bonds is 100 yuan, and the smallest unit of purchase is 1 hands 1000 yuan. Since the 1 hands need less funds to purchase convertible bonds, the number of them is larger, and the probability of 1 hands is higher than that of new shares.

Second, in addition to the direct purchase, investors get the right to give priority through the purchase of shares in advance. Since the issuance of convertible bonds usually gives priority to the placement of old shareholders, investors can buy the positive shares before the date of stock registration, and then exercise the allotment rights on the placing day to obtain convertible bonds.

The transactions of convertible bonds are similar to stocks, but there are also some differences.

At present, the convertible bonds payable in China are 100 yuan, the trading units are "hands", ten convertible bonds are "one hand", and 1000 yuan can be traded.

Convertible bond transaction costs are cheaper than stocks, transaction costs are the same as bonds, trading commissions are only 0.1%, and no stamp duty is charged. The implementation of the T+0 revolving transaction, the same day to buy the same day to sell, you can repeatedly do the same day short. There is no price limit for convertible bonds.

Question 3: how big is the convertible bond?

There are two ways to get the proceeds of convertible bonds, one is interest income, the other is trading interest: if the stock is rising during the holding period, the price of the bond will rise. You have two options: first, sell the bond and get the difference (because the bond price will follow the positive stock rises); and the two is debt to equity swap.

There are two aspects of the proceeds of the bond: interest income and maturity income each year. Take the petrochemical convertible bonds as an example, the interest portion: the petrochemical convertible bonds are issued in February 23, 2011 at a face value of 100 yuan, with a duration of six years, and the annual dividend payout rate is 0.5%, 0.7%, 1%, 1.3%, 1.8% and 2% in six years. The total income of the first five years is 0.5%+0.7%+1%+1.3%+1.8%=5.3%, and the personal income tax is 20% deductible for the individual investor: 5.3% * 0.8=4.24%; when the debt maturity expires, the issuer will redeem all non convertible equity convertible bonds at the face value of 107% (including the last interest). Because the institution does not pay taxes, the value of its maturity bonds will be close to 107 yuan, which is 7%. Therefore, the value of maturity bonds is 100+4.24+7=111.24, that is, no matter how volatile the convertible bond price is, as long as the convertible bonds hold maturity, they will eventually get 11.24% of the proceeds. So in the adverse market, we will not lose at least.

Convertible bonds in equity market When rising, there is a rate of return close to stock. The coupon rate of ordinary bonds is generally fixed, for example, the Anshan Iron and steel bonds issued in 2000. At that time, the yield of ordinary bonds issued was about 4% per year, and the Anshan Iron and steel bonds had been up to 151 yuan in six months, so that investors gained 50% of the proceeds.

Question 4: how big is the risk of convertible bond investment?

Although the risk of convertible bond investment is much smaller than that of stocks, investors will also face the following risks:

When the market price of benchmark stock is higher than the price of convertible bond, the price of convertible bond rises with the rise of stock price, but it also decreases with the fall of share price, and the holder must bear the risk of fluctuation of stock price.

When the benchmark stock market price falls below the conversion price, the holder is forced to turn to the bond investor, because the convertible bond will bring more losses, while the convertible bond interest rate is generally lower than the common debt of the same level, which will bring the risk of interest loss to the investors.

The risk of early redemption. Many convertible bonds stipulate that issuers can redeem bonds at a certain price after a period of time. Early redemption limits investors' maximum returns. If investors are inspired to operate, they will gain more benefits if they are converted to stocks in their favor.

Question 5: how to choose a good convertible bond?

Choose to buy convertible bonds near the par value. Experts suggest that the denomination of domestic convertible bonds is 100 yuan, and the purchase of convertible bonds below 105 yuan can basically control the maximum deficit in 10%.

Buy convertible bonds with good growth potential. Buying convertible bonds near the par value only guarantees that there will be no big losses, but if you want to get the desired return, it is mainly based on the growth of the company.

Buy terms to design convertible convertible bonds. Different convertible bonds have higher interest rates and lower interest rates, some have designed interest compensation clauses, and some interest rates have been adjusted with the increase of deposit interest rates. This kind of convertible bonds can avoid interest rate risk better than fixed rate convertible bonds. There are obvious differences between the convertible bond price amendment clauses, and some of the provisions of the convertible bonds stipulate that the cash dividends of the company will be revised downward to the stock price, which is equivalent to enjoying cash dividends in disguised form, while some convertible bonds do not have such provisions, and the specific provisions are quite different.

Therefore, careful screening of the issuing clauses of convertible bonds is a lesson that investors of convertible bonds must do.

Question 6: what are the skills of trading in convertible bonds?

The key to convertible bond investment is to grasp the timing and holding period of convertible bonds. Convertible bonds are especially suitable for investment in the initial stage of economic recovery, and are more suitable for medium and long term holding. The correct operation strategy of investors is to buy the convertible bonds at a low price with the goal of medium and long term holding, and then convert the convertible bonds into stocks or sell convertible bonds directly after the stock price rises, and earn the difference income.

There are three ways to operate convertible bonds.

When the stock market is good, the characteristics of convertible bonds are more obvious, and the pricing of the convertible bonds is more important. When the price of convertible bonds rises with the rise of the stock market and exceeds their original cost price, the holder should throw out convertible bonds to get the spread directly.

When the stock market changes from weak to strong, or the performance of convertible bonds can turn better, and its stock price is expected to increase greatly, investors can convert convertible bonds into shares according to the stock price, so as to enjoy the company's better performance dividends or stock gains.

When the stock market is sluggish, the performance of convertible bonds is more obvious, the market pricing takes into account more debt, convertible bonds and benchmark stock prices both fall, sell convertible bonds and convert convertible bonds into stocks are not suitable, investors should retain convertible bonds to obtain fixed interest income at maturity.