Key Points
- The Spring Festival period historically shows strong gains, with small-cap indices having a 100% probability of rising between the Spring Festival and the “Two Sessions.”
- Despite recent market dips (Shanghai Composite fell 1.27%), major financial institutions see buying opportunities, expecting catalysts like China-US data, domestic inflation data, and AI application developments.
- Pre-holiday risk aversion is causing capital rotation marquée by declining trading volume and a shift from high-valuation tech to defensive plays like Banks (Yinhang 银行) and Food & Beverages (Shipin Yinliao 食品饮料).
- Valuations indicate opportunities, with the Shanghai Composite at 16.75x P/E, suitable for medium-to-long-term positioning, and institutional buying evident in a Friday turnover of ¥2,163,600,000,000 RMB ($300.5 billion USD).
- The consensus suggests holding stocks through the Spring Festival is a smart strategy, anticipating liquidity support from the PBOC (People’s Bank of China 中国人民银行) and a post-holiday rally led by tech and cyclicals.
- Shanghai Composite Index: Down 1.27%
- Shenzhen Component Index: Down 2.11%
- ChiNext Index: Down 3.28%
- Total Friday Turnover: ¥2,163,600,000,000 RMB
The Chinese stock market just had a rough week.
The Shanghai Composite Index fell 1.27%, the Shenzhen Component Index dropped 2.11%, and the ChiNext Index declined 3.28%.
But here’s the thing—major financial institutions aren’t panicking.
Instead, they’re seeing opportunity.
We rounded up the latest investment strategies from 10 major Chinese financial institutions to help you understand what the A-share market might do next, and whether holding stocks through the Spring Festival is actually a smart play.
The Spring Festival Effect: Historically Strong Territory
Let’s start with the calendar pattern everyone’s talking about.
February and the Spring Festival period represent the strongest phase of the “Spring Fever” calendar effect.
Here’s what the data shows:
- Small-cap indices have a 100% probability of rising between the Spring Festival and the “Two Sessions” (historically)
- February itself has an 87.5% probability of posting gains
- Small-cap styles typically outperform during this window
GF Securities (Guangfa Zhengquan 广发证券) is pointing out that indices like the CSI 500, 1000, and 2000 already kicked off their rally in late December.
Some traders are wondering: Did we already miss the “Spring Fever” gains?
Not necessarily.
Historical patterns suggest that when the rally starts early (December or January), it usually aligns with either fundamental improvements in industries or major policy shifts.
An early start doesn’t kill the momentum through February and March—it often amplifies it.
Near-Term Catalysts: Data Releases and AI Momentum
Industrial Securities (Gongneng Zhengquan 工业证券) is laying out the case for near-term optimism.
Next week, several catalysts are coming into focus:
- China-US macro data disclosure window – This could reshape investor sentiment on both sides of the Pacific
- Domestic inflation and social financing data – Expected to confirm fundamental improvements
- US non-farm payrolls and CPI – May reset monetary policy expectations globally
- AI (Rengong Zhineng 人工智能) application catalysts – Intensive developments expected around the Spring Festival period
The recent volatile shakeout has cleared out weak hands.
Now, fresh catalysts could provide real directional clarity.
Historically, risk appetite jumps significantly after the Spring Festival, with small-cap and growth stocks outperforming in a major way.
The Current Volatility Range: Where’s the Bottom?
Shenwan Hongyuan (Shenwan Hongyuan 申wan Hongyuan) is asking a crucial question: Where are we in the short-term adjustment?
Their take:
- Overall “money-making effects” have fallen from historical highs
- The period of extreme low cost-performance has already passed
- A rebound could happen anytime, but a self-driven bounce has limited strength without new catalysts
- A-share tech stocks may follow a rebound in US markets, but confirming the lower boundary could take time
Translation: We’re probably getting closer to a floor, but you might need fresh news to confirm it.
Pre-Holiday Risk Aversion: Capital Rotation in Progress
China Galaxy Securities (Zhongguo Yinhe Zhengquan 中国银he Zhengquan) is tracking something interesting.
Ahead of the 2026 Year of the Horse Spring Festival, the market is showing classic pre-holiday risk aversion behavior.
Here’s what’s happening:
- Trading volume is declining – Capital is taking a wait-and-see stance
- Money is rotating out of tech – High-valuation tech sectors are losing favor
- Defensive plays are strengthening – Banks (Yinhang 银行) and Food & Beverages (Shipin Yinliao 食品饮料) are moving against the trend
The growth style was partially realized in January, but a “stability-first” approach is dominating before the holiday.
Galaxy Securities’ recommendation is pretty balanced:
- Before the holiday: Focus on high-dividend sectors like Banks and dividend-paying stocks
- After the “Two Sessions”: Shift toward high-certainty growth sectors—AI Applications, High-end Manufacturing, and New Energy (Xinnengyuan 新能源)
Global Trends Reshaping Capital Markets
CITIC Securities (Zhongguo Guoji Xinxin Zhengquan 中国国际信息信用评级有限公司) is zooming out to see the bigger picture.
Recent overseas market volatility reflects two massive trends:
- Real Economy Focus: The US and Europe are urgently focused on securing mineral chains and “real economy” assets
- AI Disruption: Artificial intelligence is attacking traditional monopolies, creating winners and losers
For investors used to “easy money,” global financial uncertainty is rising.
But here’s where China has an advantage: China’s capital market has already priced in the transition to the real economy.
The market is now focused on “improving quality and efficiency.”
CITIC’s playbook includes:
- Maintain a base of Resources + Traditional Manufacturing
- Buy the dips in non-bank financials
- Increase exposure to consumer and real estate chains
Two Catalysts That Could Reverse the Downside
Soochow Securities (Suzhou Zhengquan 苏州证券) is identifying two major factors currently depressing the market—and both might be about to flip.
Factor #1: Overseas Liquidity
The “Warsh Trade” (expectations of hawkish policy from Kevin Warsh) could see a pullback.
His primary mandate might actually be to coordinate with Trump’s policies to cut rates, not hike them.
This would be a major sentiment shift.
Factor #2: Tech Sentiment
The recent tech correction is essentially a hit to risk appetite where investors have been interpreting news through a bearish lens.
But here’s the reality: The Artificial Intelligence (Rengong Zhineng 人工智能) industry is still iterating rapidly.
As long as the industry trend isn’t broken, irrational pessimism creates what Soochow calls a “Golden Pit”—a buying opportunity.
Spring Rally Still in Play: Tech and Cyclicals as Leaders
Huajin Securities (Huajin Zhengquan 华金证券) is making a bold call: The Spring rally is not over.
Their reasoning:
- Holiday risks are limited – Geopolitical concerns in the Middle East shouldn’t significantly impact domestic markets
- Economic data could improve – Spring Festival travel and consumption data often perform well
- Liquidity support is coming – The PBOC (People’s Bank of China 中国人民银行) typically increases net injections before the holiday to counter seasonal pressure
- Growth and cyclicals should lead – Tech growth and cyclical sectors remain promising
Style Rotation in Action: Consolidation Before the Next Wave
Zheshang Securities (Zhejiang Shangshang Zhengquan 浙商证券) is documenting the shift happening right now.
The “fast lanes” of Tech and Non-ferrous Metals are slowing down.
The market has entered a consolidation phase.
What to expect:
- Before the holiday: The market should remain strong but range-bound
- After the holiday: Primary offensive opportunities appear
- Ongoing rotation: Capital is moving from high-performing tech/growth stocks into undervalued financial and consumer sectors
Zheshang’s outlook is a “Systemic Slow Bull” for the quarter—steady upward momentum without explosive moves.
The Dividend Play: High-Dividend Sectors Are Getting Interesting
Zhongtai Securities (Zhongtai Zhengquan 中泰证券) is breaking down the medium-term opportunity.
Short-Term: Tech Dominance
The market will remain dominated by structural tech activity:
- AI Applications
- Robotics (Jiqi-ren 机器人)
- Semiconductor (Bandouti 半导体) equipment
Mid-Term: The Dividend Shift
The logic for high-dividend sectors is becoming clearer.
After the Spring Festival, as policy expectations from the “Two Sessions” regarding growth and consumption are realized, the market style may transition from “high-elasticity trading” to “certainty-based allocation.”
This favors stable, high-dividend stocks at low valuations.
Valuation Check: Buying Opportunities Are Visible
Central China Securities (Zhongyang Zhonghua Zhengquan 中央中华证券) is doing the math on valuations.
Current P/E ratios suggest real opportunity:
- Shanghai Composite: 16.75x (suitable for medium-to-long-term positioning)
- ChiNext Index: 51.98x (elevated, but structural growth stories justify it)
Friday’s turnover hit ¥2,163,600,000,000 RMB ($300.5 billion USD)—above the median daily volume of the past three years.
This suggests institutional buying is happening despite the weekly declines.
High-tech manufacturing remains in expansion, even as official PMI dipped slightly.
Central China’s balanced strategy:
- Continue following AI and high-end manufacturing
- Look for opportunities in Batteries (Dianchi 电池)
- Scout Electronic Components (Dianzi Yuanjian 电子元件)
- Monitor Consumer Electronics (Xiaofei Dianzi 消费电子)
The Bottom Line: Hold, Don’t Panic
When 10 major Chinese financial institutions align on a message, it’s worth paying attention.
Here’s what they’re collectively saying:
- The Spring Festival effect is real. Historical data supports holding stocks through the holiday period.
- Recent weakness is creating opportunity. Valuations are reasonable, and catalysts are coming.
- Style rotation is healthy. Capital flowing from tech to dividends is normal pre-holiday behavior.
- New catalysts are arriving. Data releases, AI developments, and policy signals should provide direction.
- Liquidity support is coming. The PBOC will inject money before the holiday, supporting equity prices.
If you’ve been sitting on cash waiting for a dip—this might be it.
If you’re holding already—the consensus from major institutions suggests holding through the Spring Festival is still the right move for A-share market exposure.
