Did you choose to hold stocks or cash through the National Day holiday this year?
On the final trading day before the break, the three major A-share indices closed mixed, with turnover of 1.45 trillion yuan still at a low level. Pre-holiday volume contraction is a fairly common calendar effect for A-shares, but this year, with the short gap between the Mid-Autumn Festival and National Day holidays, this pattern has been relatively pronounced.
Huaxia Fund told reporters that the short interval between the two holidays made the phenomena of shrinking volume, lack of follow-through buying and rising risk-aversion sentiment more obvious. Against a backdrop of reduced-sum games, some short-term funds cashed out after geopolitical positives landed, intensifying short-term market adjustment pressure.
Looking at overseas markets, on October 1, U.S., Japanese and South Korean stock markets all posted a fourth-quarter "strong start," with Japanese and Korean markets surging. As expectations for Federal Reserve rate hikes cooled, the three major U.S. indices continued to rise on October 2, with the Nasdaq hitting an intraday record high. Many institutions believe holding A-shares through the holiday may be the more worthwhile choice.
Data shows that across 26 National Day holidays from 2000 to 2025, the Shanghai Composite rose on the first trading day after the break 17 times, a 65% win rate; the Shenzhen Component rose 16 times, a 62% win rate; and the ChiNext Index (since 2010) rose 10 times, a 63% win rate. This shows the win rate for major indices all exceeded 60%. Of course, historical calendar effects provide probabilities, not an exact match for this year's market. For A-shares this year, overseas market changes during the holiday and the upcoming third-quarter earnings disclosures may be the variables that deserve more attention.
Notably, before the holiday, officials rolled out a package of incremental policies to expand domestic demand, boosting market confidence. On September 29, the central bank introduced measures including lowering the pledged supplementary lending (PSL) rate, expanding the scope of PSL support, and increasing re-lending quotas for technological innovation and industrial upgrading. On the same day, the Ministry of Finance, the central bank and the financial regulator issued a notice on implementing interest subsidy policies for residential mortgage loans, using fiscal subsidies to support rigid housing demand among urban and rural residents.
Dong Zhongyun, chief economist at AVIC Securities, told reporters that this policy cycle may not be a single pulse, and follow-up incremental measures are still worth anticipating, with investors able to track them continuously.
Institutions Favor Holding Through the Holiday, Investors Eye a Fourth-Quarter Strong Start
On the eve of this year's National Day, A-share conditions showed oscillating declines followed by stabilization near the end of the holiday period. From September 18 to September 22, A-share turnover exceeded 2 trillion yuan for three consecutive trading days, then fell to 1.78 trillion yuan and 1.67 trillion yuan on September 23 and 24, the two trading days before Mid-Autumn Festival. From September 28 to 30, turnover dropped from 1.72 trillion yuan to 1.45 trillion yuan, though major indices edged up with mild fluctuations.
On September 30, funds concentrated in the pharmaceutical sector, with the pharmaceutical and biological products industry (Shenwan) surging 2.73% that day, attracting 12.756 billion yuan in net main-force inflows. Food and beverage and banking sectors rose 1.68% and 1.47% respectively, each drawing more than 2 billion yuan in net main-force inflows.
Compared with previous years, A-shares faced certain external risks before the holiday this year. Several interviewees said the rapid rise in U.S. Treasury yields squeezed global liquidity and risk appetite, and combined with Middle East tensions, oil prices and China-U.S. frictions, the risk exposure increased while A-shares were closed and overseas markets traded normally.
Dong Zhongyun told reporters that the 10-year U.S. Treasury yield is now near its highest since June 2007, triggering global asset volatility. Uncertainty remains over the Middle East situation, and the U.S. will release multiple economic data points during the holiday, all of which could further amplify Treasury yield swings.
Amid greater external uncertainty, risk-aversion sentiment before the holiday was amplified this year. A public fund manager in Shanghai told reporters that in past years, holiday concerns were mostly scattered news items, while this year they were compounded by Treasury yields, Middle East tensions, oil prices and China-U.S. frictions. Against this backdrop, the risk exposure of overseas markets trading normally during the holiday does exist.
In overseas markets, on October 1, Japanese and South Korean stocks closed sharply higher, and the three major U.S. indices also ended slightly up, all securing an October "strong start." On October 2, the three major U.S. indices rose collectively, with the Nasdaq leading and hitting a record high. The September nonfarm payrolls data released that day came in far below expectations, significantly cooling expectations that the Fed would continue hiking in October.
On A-share investors holding through the holiday, many institutions hold a positive view. The public fund manager told reporters that historically, the market has tended to decline on shrinking volume in the one or two weeks before National Day and may rebound in the week after. Over the past 15 years, closing prices after the holiday rebounded from pre-holiday lows in 13 of them. "This year's pre-holiday shrinking adjustment is also fairly close in shape to past patterns. Market volume has shrunk by nearly half from the July high, and energy is already stabilizing. Clearing positions for cash now could mean missing the post-holiday repair."
"For investors, the risk to watch is not whether to hold stocks, but whether they hold overly crowded names. Replacing crowding with earnings certainty, rather than replacing positions with cash, may be more rational," the public fund source said.
Huaxia Fund told reporters that according to calendar effects, the probability of A-share volume recovering after the holiday is extremely high, and the win rate for gains in the five days after the holiday is above half. Current market volume has already contracted to a low level, and the pre-holiday adjustment has also left room for a post-holiday volume expansion rally.
Looking at investor choices, some retail investors did not cut positions due to the pre-holiday adjustment, and they hope the first trading day after the holiday, also the first trading day of the fourth quarter for A-shares, can deliver a "strong start."
Zhang Ming (pseudonym), a post-90s investor in Shanghai, told reporters that his current equity position is about 80%, and he did not trade before the holiday. "Most of my holdings are semiconductors, plus about 10% in bank stocks. After the holiday I may add to the nonferrous metals sector."
Lin Yue (pseudonym), a post-90s investor in Guangzhou, currently has a low position, holding electronics sector names and some dividend ETFs. She said, "After the holiday I'll look at opportunities in tech. If major financials pull back, I'll also consider adding, since dividends are stable."
Yang Xiaoyu (pseudonym), a post-2000s investor, said she added a small amount during the sharp pre-holiday pullback and mainly holds financial stocks. "Based on historical experience, a rebound is very likely after the holiday."
For the post-holiday market, GF Securities believes that beyond calendar effects, historical post-holiday performance is mainly driven by incremental information during the holiday. Combined with this year's actual style performance, the October market may gradually return to fundamentals-based pricing.
Looking back at the period around National Day 2025, A-shares at that time staged a pattern of "high-level oscillation before the holiday and a volume-driven rally after." On September 30 that year, the Shanghai Composite approached the 3,900-point mark, while the Shenzhen Component and ChiNext both hit stage highs, with combined turnover of 2.2 trillion yuan. On October 9 that year, the first trading day after the holiday, the Shanghai Composite jumped 1.32%, hitting a new high since August 2015, while the Shenzhen Component and ChiNext both rose. Turnover that day reached 2.67 trillion yuan, and most of the 31 Shenwan first-level industry sectors gained, showing clear post-holiday volume expansion.
217 Stocks Doubled Year-to-Date, Fourth Quarter Brings Earnings Validation
If calendar effects provide a reference for whether to hold stocks or cash through the holiday, then A-shares' overall performance in the first three quarters may influence the post-holiday market direction.
Wind data shows that as of September 30, the Shanghai Composite, Shenzhen Component and ChiNext had fallen 3.19%, 4.71% and 2.12% year-to-date, while the STAR 50 and STAR Composite had risen 13.82% and 10.91% respectively. Among the 31 Shenwan first-level industries, 8 rose, including electronics, coal, utilities, banking, communications and oil & petrochemicals, with electronics leading at a 27.56% gain; the other 23 industries posted negative returns year-to-date, with defense, autos and steel among the biggest decliners.
In terms of index and individual stock performance, the standout feature of the first three quarters was "limited index moves but sharp structural divergence." As of September 30, the three major indices had all declined to varying degrees year-to-date, but the STAR 50 and STAR Composite still posted positive returns, with market funds clearly concentrating in tech growth and some resource and dividend directions.
On individual stocks, as of September 30, the arithmetic average gain across all 5,572 A-share stocks year-to-date was 0.50%, while the median decline was 12.13%. A total of 1,729 stocks rose, accounting for about 30%. The gap between top and bottom performers was wide, with 217 stocks doubling year-to-date, mainly concentrated in electronics, nonferrous metals and chemicals. At the same time, more than 3,800 stocks fell during the year, showing highly divergent money-making effects.
This means that for A-shares in the first three quarters, what deserves more attention is the "difference between index performance and the individual investor experience": a small number of high-beta assets delivered strong money-making effects, but most stocks did not rise in sync.
Market activity remained at a high level. In the first three quarters, total A-share turnover surpassed previous highs to reach 465 trillion yuan, up more than 50% from the same period in 2025. Shanghai Stock Exchange data shows that as of the end of August, total new individual and institutional accounts in 2026 had reached 27.41 million, up more than 40% from the same period in 2025. High turnover, high participation and high divergence coexisted, forming an important feature of A-shares in the first three quarters.
After the National Day holiday, A-shares will enter a dense third-quarter earnings disclosure period. For sectors that rose sharply earlier, whether earnings can be delivered will become a key market focus.
The public fund manager told reporters that the essence of this year's structural market is pricing based on earnings and industrial trends, and third-quarter reports will directly test the quality of high-flying growth sectors. "Electronics and communications have risen a lot and need third-quarter sequential growth, AI orders and production scheduling data for confirmation. Whether consumption can move from rebound to reversal depends on the inflection point in third-quarter revenue and profit. Cyclical sectors such as coal and machinery need to show persistence in prices and the export chain."
For the tech sectors that led earlier gains, several interviewees believe fourth-quarter conditions may become more balanced, but structural opportunities remain. Dong Zhongyun told reporters that from a medium-term perspective, market style in the first half was too extreme, and tech stock trading was too crowded. Since the third quarter, funds have begun to rebalance. With support from domestic demand expansion policies, rebalancing in the fourth quarter is expected to continue and stabilize.
Rebalancing may appear in two ways: first, further balance between tech and non-tech sectors; second, within tech growth, as new AI applications continue to land, rebalancing may also occur between upstream hardware and downstream applications.
Huaxia Fund is optimistic about a prosperity structure of "tech plus nonferrous metals." Against the backdrop of global liquidity contraction and valuation pressure, it recommends seeking structural opportunities and resisting external uncertainty through high-performing directions with order and profit delivery.
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