The "Spring Fever" market may continue, with funds expecting performance in the A-shares after the Spring Festival

Over the past decade, the A-share market has consistently performed well after the Spring Festival, with the “spring agitation” pattern rarely absent. During the last week of trading before the recent Spring Festival, although trading volume contracted, liquidity remained stable, and funds were optimistic about the post-holiday market, with some investors choosing to “hold stocks through the holiday.”

The policy expectations for the “14th Five-Year Plan” have heated up, coupled with liquidity support. Institutions still view technological growth as the core theme, and value dividends are also expected to play a role.

Spring Festival Market Has Patterns

Data from the past ten years show that the market generally performs well after the Spring Festival. According to Wind statistics, in the five trading days following the Spring Festival from 2016 to 2025, the Shanghai Composite Index rose in 7 years. In 2024, the five-day increase reached 4.85%, the highest in nearly a decade. The Shenzhen Component Index and ChiNext Index also experienced 7 periods of gains.

Influenced by factors such as avoiding external uncertainties during long holidays and increased cash withdrawal needs during the festival, investor sentiment in A-shares tends to decline before the holiday and rebound afterward. Wind’s daily average trading volume for all A-shares shows a pattern of shrinking before the holiday and expanding afterward, providing room for post-holiday recovery. This results in most years seeing better performance after the holiday than before.

Based on historical market trends, Guotou Securities analyst Lin Rongxiong’s team summarized three characteristics of spring agitation: first, it tends to start from December to February of the previous year; second, policy changes and economic expectations are the most common catalysts; third, the average return during this period is between 10% and 15%. “‘Spring agitation’ has almost never been absent in the past 16 years, demonstrating a strong seasonal pattern. Historically, this rally lasts about 40 days on average,” said Lin Rongxiong’s team.

In the last week before the Spring Festival, the three major indices—Shanghai Composite, Shenzhen Component, and ChiNext—all rebounded, driven by the technology sector, which stabilized the indices. The tendency of funds to “hold stocks through the holiday” may have already been confirmed. Although trading volume and turnover shrank significantly compared to the previous week, the average daily turnover still remained above 20 trillion yuan, indicating liquidity remains relatively active.

On the last trading day before the holiday, despite a broad decline caused by overnight external shocks, some sectors representing new productive forces, such as semiconductor equipment, showed resilience. Internal fund reallocation was more prominent than outflows, shifting from cyclical sectors affected by external disturbances to technology growth areas with clear industry trends and solid fundamentals.

Tianfeng Strategy analyst Wu Kaida noted that from a capital perspective, although trading volume decreased before the holiday and new public fund subscriptions declined, the net inflow of stock ETFs resumed, suggesting main funds may have stopped reducing holdings. Meanwhile, margin financing and securities lending funds experienced net outflows, waiting for trading pulses to rebound. This suggests the current rally could continue.

Optimistic Post-Holiday Market Expectations

With the Spring Festival approaching, will the “spring agitation” continue after the holiday? Most institutions are optimistic. Nomura Dongfang International, Guotai Huarong Securities, Everbright Securities, Huajin Securities, and others have clearly recommended “holding stocks through the holiday.” A survey by Private Equity Ranking also shows that over 60% of private equity firms prefer to hold a full or heavy position during the holiday.

Analyzing the drivers of the “spring agitation,” Lin Rongxiong’s team states that January to March each year is a period of performance vacuum, where market debates focus on policies and expectations. Among various policies, monetary easing is the most significant factor driving spring market enthusiasm.

On the last trading day before the holiday, the central bank conducted a 10 trillion yuan reverse repurchase operation via fixed amount and rate bidding, with multiple price points. Chief economist Dong Ximiao from Lending Union said this operation was a continuation of previous measures, with a net injection of 5 trillion yuan. “The central bank’s increased and sustained reverse repos before the holiday send a positive signal of ample liquidity and market stability,” he said.

Tianfeng Securities analyst Tan Yiming believes that this year’s “spring agitation” will have a more solid foundation, supported by policy expectations at the start of the 14th Five-Year Plan, prospects of global liquidity easing, and a trend of residents reallocating funds into equities. Additionally, the unusually long nine-day Spring Festival holiday has led to earlier consumption demand release than usual, with travel and consumption expected to hit new highs, making economic outlooks more stable.

Qianhai Kaiyuan Fund chief economist Yang Delong advises investors to monitor certain indicators after the holiday, such as whether daily market turnover can effectively increase, and whether foreign capital will flow into Hong Kong stocks and A-shares. “Currently, the likelihood of a spring rally after the holiday remains quite high,” he predicts.

Interestingly, the Hang Seng Index has not shown a clear calendar effect post-Spring Festival in the past. However, GF Securities strategist Liu Chenming believes this time may be different. He notes that the pricing logic of Hong Kong stocks has been changing recently, with increasing correlation to A-shares, and a passive follow-up rally might occur, similar to phenomena seen after the Spring Festivals of 2024 and 2025.

Technology Still the Main Theme

Another key topic is whether market style will shift after the holiday. According to Wind data, over the past ten years, the five trading days after the Spring Festival, the CSI 1000 and ChiNext indices had the highest average gains, with the CSI 500 rising 9 times—more than the Shanghai Composite and CSI 300—indicating better post-holiday performance for small- and medium-cap stocks and tech stocks.

Lin Rongxiong’s team explains that style shifts around the Spring Festival are highly probable, generally showing a pattern of “value and large caps before the festival, growth and small/mid caps after.” From 2010 to 2025, only 2 years did not see a style switch between growth and value.

In the month before the Year of the Horse, the market already showed signs of shifting toward value stocks. Will the post-holiday style further favor value? Most institutions still lean toward technology growth, but some see opportunities in value stocks.

Lin Rongxiong’s team believes that the sharp fluctuations in precious metals prices before the holiday have eased concerns about performance of non-ferrous metals and overseas AI giants. Post-holiday, technology growth is expected to regain momentum, with core allocations including non-ferrous metals, chemicals, AI applications, power grid equipment, engineering machinery, and specialized equipment in export chains.

Tianfeng Securities suggests that historically, small-cap growth stocks tend to outperform after the holiday, and this pattern may continue this year. However, its strength could be limited by two factors: first, in a favorable industry environment, large-cap growth stocks may also perform well; second, “high-dividend” assets remain a solid long-term allocation strategy, so the post-holiday style might be a “dance of growth and dividends” rather than a complete switch.

Yang Delong notes that in the Year of the Snake, tech stocks stood out remarkably. In the Year of the Horse, technology remains a key theme but likely will not be the sole focus; other sectors are also expected to rotate and create broader profit opportunities.

(Source: Securities Times)