On Monday, Chinese A-shares experienced a strong rally. By the close, the Shanghai Composite Index had risen 1.41%, reclaiming the 4,100-point level, while the Shenzhen Component Index advanced 2.17%. The ChiNext Index climbed 2.98%, and the STAR 50 Index increased by 2.51%. Combined turnover across the Shanghai, Shenzhen, and Beijing exchanges totaled approximately 2.27 trillion yuan, an increase of over 100 billion yuan from the previous session.
More than 4,600 stocks in the A-share market closed higher. The semiconductor sector led gains, with VeriSilicon Microelectronics rising nearly 15%, NationalChip Technology up close to 13%, and Fudan Microelectronics Group gaining almost 10%. AI application concepts also saw active trading, with Chinese Online and Haikan Shares hitting the 20% daily limit, while Haitian Ruisheng and others rose over 10%. The CPO concept performed strongly, with Tianfu Communication, which has a market cap exceeding 200 billion yuan, hitting an intraday limit-up. Both Eoptolink Technology and Zhongji Innolight also moved higher. The disperse dyes concept stood out, with Runtu and Yabang reaching the daily limit. The space photovoltaic concept remained popular, with JPT hitting a 20% limit-up and GCL System Integration securing its fourth consecutive涨停.
On the same day, major Asia-Pacific stock indices also moved higher collectively. Japan's Nikkei 225 Index closed up 3.89%, South Korea's KOSPI rose over 4%, and Australia's S&P/ASX 200 gained 1.85%.
Amid complex expectations for overseas liquidity and significant market volatility, the sustainability of the rebound in China's three major indices and the choice of holding stocks or cash during the upcoming holiday have become key concerns for investors.
Yong'an Futures senior stock index analyst Hua Xiang identified three main reasons for recent sharp market fluctuations: First, the increase in margin requirements has curbed some speculative trading, significantly reducing current leverage risks. Second, market worries about a potential shift in Federal Reserve policy triggered notable corrections in commodities and cyclical stocks, making valuations of related risk assets more reasonable. Third, massive capital expenditure plans by U.S. tech giants raised profitability concerns, impacting AI-related sectors. Hua believes that after weathering these three tests, the market has shown strong resilience. The correction in the three major A-share indices in early February has instead created more favorable conditions for a "spring rally."
Dongzheng Futures senior macro strategy analyst Wang Peicheng is also optimistic about the market outlook. He believes the "spring rally" is not yet over. Earlier market excitement was largely driven by crowded trades, which is distinctly different from volatility caused by policy expectations. As 2026 marks the start of the 15th Five-Year Plan, and with the National People's Congress convening after the Spring Festival holiday, new policies and concepts are likely to drive the continuation of the spring rally. Furthermore, the dominant factor in A-share listed company valuations remains the domestic economic fundamentals. With ample domestic liquidity and proactive policies, the foundation for a "long-term, slow bull market" in A-shares remains solid, and overseas factors are unlikely to cause sustained disruptions.
Regarding stock index futures, Hua Xiang noted that the market has been active since the beginning of 2026, with small and mid-cap growth style indices like the CSI 500 and CSI 1000 leading gains. In terms of sector contributions, the artificial intelligence industry chain and some cyclical industries were the main drivers of the index rise, indicating that the market is balancing both technology positioning and inflation recovery logic.
With only four trading days remaining before the Spring Festival holiday, should investors hold cash or stocks? Both analysts recommend that investors develop personalized strategies based on their own risk tolerance and current positions.
Wang Peicheng suggests that investors with lower risk appetite may consider holding cash during the holiday, avoiding the temptation of short-term market fluctuations, with the primary goal of reducing interference from holiday uncertainties. Investors with higher risk tolerance could consider holding stocks. The short-term domestic policy environment is stable, market expectations are optimistic, and the likelihood of a significant A-share correction is low. In the medium to long term, the foundation for a "slow bull market" remains, with a positive trend. Grasping the main themes of the "bull market" is far more important than deciding on short-term positions.
Hua Xiang offers a more intuitive mindset check. He advises investors to ask themselves: If holding stocks during the holiday, will you constantly worry about overseas market movements or post-holiday volatility? If the answer is yes, it may indicate that your position is too heavy. Conversely, if you remain calm and unconcerned about short-term swings, your current position is likely appropriate. If you are concerned about missing out after the holiday, you might consider establishing a partial position.
"The Spring Festival period is a time when domestic markets are closed while overseas markets are full of variables. Investors should approach their holdings from a medium- to long-term allocation perspective to calmly respond to market fluctuations," Hua said.
Comments