The “Spring Rally” in Chinese Stocks: Historical Data Shows 75-80% Probability of Post-Lunar New Year Gains

If you’ve been watching the Shanghai Composite Index (Shangzheng Zhishu 上证指数) around Lunar New Year, you’re probably noticing something interesting.

There’s a recurring pattern in the Chinese stock market that investors have been tracking for two decades.

And the numbers are hard to ignore.

The “Spring Rally” Effect: What 20 Years of Data Tells Us

According to historical data from Choice, a leading financial analytics platform, there’s a remarkably consistent upward trend in the Shanghai Composite Index following the Lunar New Year holiday.

During the 20-year period spanning 2006 to 2025, the pattern has been almost predictable:

• 5 trading days post-holiday: 75% probability of gains
• 10 trading days post-holiday: 70% probability of gains
• 20 trading days post-holiday: 80% probability of gains
• 30 trading days post-holiday: 60% probability of gains

What does this mean in real dollars?

The median returns during these windows averaged:

• 5 trading days: 1.64% median return
• 10 trading days: 1.32% median return
• 20 trading days: 9.45% median return
• 30 trading days: 3.88% median return

That 20-day window with an 80% success rate and 9.45% average return is where things get interesting for investors.

Why This Pattern Matters: Understanding Seasonal Market Momentum

• Capital Rotation: Flow of institutional money back into A-shares
• Policy Expectations: Clarity from the “Two Sessions” meetings
• Liquidity Cycles: Unique seasonal financial inflows
• Global Sentiment: Influence of the “January Effect”

The phenomenon has earned itself a nickname in Chinese investment circles: “Spring Restlessness” (Chunji Zaodong 春季躁动).

It’s not just random luck.

Several structural factors drive this seasonal uptick:

• Capital rotation: After holiday withdrawals, institutional money flows back into A-share markets as trading resumes
• Policy expectations: The new fiscal and monetary policy directions often become clearer in early spring
• Global market dynamics: The “January Effect” observed in Western markets influences global sentiment and Chinese equities
• Liquidity cycles: China’s unique financial infrastructure creates specific cycles of money flowing in and out of the market

The 80% hit rate over the 20-day window suggests this isn’t noise.

It’s a genuine market phenomenon that professional investors have learned to track and act on.

Market Scale: The Numbers Behind the “Spring Rally”

How much money are we talking about here?

During high-volatility years included in this historical dataset, daily turnover on the Shanghai and Shenzhen exchanges has frequently exceeded ¥1 trillion RMB ($138.9 billion USD).

That’s not a typo.

That’s daily volume during peak periods.

Even during more conservative market cycles, the “Spring Rally” remains a central focus for both institutional and retail investors in China.

The liquidity here is massive—and that liquidity is what creates the opportunity.

Who’s Watching This: Major Financial Institutions and Their Outlook

This isn’t obscure market trivia that only day traders care about.

Major Chinese financial institutions have been tracking and analyzing this pattern for years.

Firms like SDIC Securities (Guotou Zhengquan 国投证券) and Huatai Securities (Huatai Zhengquan 华泰证券) regularly publish research on post-holiday market dynamics and the “Spring Rally” phenomenon.

Their analysis points to a key catalyst:

Policy signals from the “Two Sessions” (Lianghui 两会)—the annual meetings of China’s top political bodies that typically occur in March—often provide fundamental support for these price movements.

When investors get clarity on government priorities for the year, capital deployment follows.

The timing of these policy announcements aligns suspiciously well with the strongest gains in the 20-30 day window after Lunar New Year.

Individual Stocks and Broader Market Movements

While sector-wide patterns are clear, individual stocks move with the broader sentiment.

Companies track alongside market momentum during these periods.

However, important caveat here:

Historical probability doesn’t guarantee future results.

External macroeconomic variables—global recession risks, domestic credit cycles, geopolitical tensions, and unexpected policy shifts—can disrupt even the most historically reliable patterns.

The 80% success rate is compelling, but it’s not a guarantee.

It’s a probabilistic edge, not a certainty.

What This Means for Investors

The data is clear: there’s a measurable seasonal pattern in the Shanghai Composite Index following Lunar New Year.

For the past 20 years, this pattern has held with surprising consistency.

The strongest probability window is 20 trading days post-holiday with an 80% success rate and a 9.45% median return.

But success in the market requires more than just knowing historical patterns.

It requires:

• Understanding the drivers behind the pattern (policy, liquidity, sentiment)
• Recognizing when external factors might break the historical trend
• Having a risk management plan for the 20-40% of years when the pattern doesn’t hold
• Analyzing current macroeconomic conditions before deploying capital

The “Spring Rally” (Chunji Zaodong 春季躁动) is one of the most documented seasonal patterns in Chinese equity markets.

Whether you’re an institutional investor or a retail trader, understanding this seasonal dynamic is essential knowledge for navigating the Shanghai Composite Index post-Lunar New Year.

References

• Shanghai Composite Index Post-Holiday Performance Data – East Money (Dongfang Caifu 东方财富)
• Choice Financial Terminal – Choice Data (Choice Shuju Choice数据)
• Market Data Overview – Shanghai Stock Exchange (Shang Hai Zheng Quan Jiao Yi Suo 上海证券交易所)