I really can't understand this newbie. I kindly ask all the experts to help clarify.

PortfolioAlert · 2026-02-06T08:26:31+00:00

The article discusses Jemei Technology and its convertible bonds' intraday movements, pointing out that the convertible bonds are about to meet the mandatory redemption conditions, and the capital's intention may be to quickly build positions in the underlying stock through the convertible bonds. Although both the underlying stock and the convertible bonds declined at midday, the convertible bonds were rapidly pushed up, maintaining a premium rate of 10%. The author suggests that it may be a strategy for funds to facilitate market control by choosing to convert bonds at an appropriate premium to acquire more of the underlying stock.

PortfolioAlert

2026-02-06 08:26:31

Abstract generation in progress

Regarding the intraday performance of Jiemei Technology and its convertible bonds today, I, as a novice, really can’t understand it. I sincerely ask all the experts to help clarify.
Jiemei Technology’s redemption price is 34.4 yuan. Today marks the 13th day that the stock price has been above the redemption price. If nothing unexpected happens, the redemption conditions could be met as early as next Monday. The convertible bonds mature at the end of this year, and once the conditions are met, the company is almost certain to issue a redemption announcement.
This morning, both the stock and the convertible bonds of Jiemei were falling, maintaining a normal premium rate of about 2%. After the market opened in the afternoon, the stock price mostly stayed at the morning’s decline, while the convertible bonds were quickly pushed up by funds, with rapid volume increase, maintaining around a 10% premium rate until the close. I can’t figure it out—under these circumstances, with only 2 days left to meet the conditions and a guaranteed redemption, what is the purpose of the funds that are aggressively pushing up the convertible bonds?
Let me share my naive opinion first: some funds are interested in Jiemei Technology’s stock and want to buy a large amount quickly to build a position (for example, tens of millions of shares). Currently, based on changes in shareholder numbers and institutional holdings, the stock is basically controlled by pre-existing institutional investors, with very little floating stock. It’s difficult to control the stock price surge by short-term large purchases. However, using the convertible bonds at this critical moment—buying them at a premium and converting—makes it quite easy. Today, the actual premium is about 10%. So, my guess is: they are taking an appropriate premium to buy the convertible bonds and convert to build a position.
Dear experts, what are your insights?
Note: I hold Jiemei’s stock myself, and it is my primary holding.

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