Trading activity in China's A-share market has cooled once more after three consecutive sessions above the 2 trillion yuan threshold, with investors now weighing the historical odds of holding positions through the upcoming Mid-Autumn and National Day holidays.

On September 23, the combined turnover across the Shanghai, Shenzhen, and Beijing exchanges reached 1.78 trillion yuan, while the Shanghai Composite Index slipped 0.39% to close at 3,936.52 points. Market observers note that the pre-holiday rebound in turnover from recent lows signals fresh buying from risk-averse capital, though the renewed decline closer to the break falls within normal seasonal patterns as uncertainties following global central bank rate hikes gradually dissipate.

Historical data suggests that holding stocks through the holiday period has yielded better win rates, yet industry experts advise against excessive aggressiveness. They recommend balanced portfolio allocation, noting that overseas interest rate movements and geopolitical developments during the break could influence post-holiday trading, even as the A-share market's trajectory will ultimately depend on the gradual realization of third-quarter earnings results due in October.

Overseas rate hikes concluded, third-quarter results may steer post-holiday direction

September 18, 21, and 22 saw daily turnover exceed 2 trillion yuan, marking a notable recovery from the languid mid-September level of 1.63 trillion yuan on September 15. This pre-holiday volume stands at roughly half of the historical peak of 3.99 trillion yuan recorded on January 14, 2026.

Pan Jun, investment manager at Cheese Fund, observed that the earlier turnover rebound reflected positive risk appetite repair, but cautioned it cannot yet be equated with sustained incremental capital inflows or confirmation of a new uptrend. Profit-taking and pre-holiday risk reduction have simultaneously increased, suggesting the market is transitioning from "shrinking-volume wait-and-see" to "expanding-volume speculation." If third-quarter earnings expectations improve, a more durable trend could emerge; otherwise, range-bound trading persists.

Li Qian, investment advisor at Guangzhou Yuesheng Financial Advisory, explained that a pre-holiday turnover recovery typically indicates risk-averse capital re-entering the market, as some investors perceive limited downside risk and are willing to carry positions through the break. However, as the holiday approaches, investors often trim positions again due to lingering uncertainties.

Wen Tianna, CEO of Broad Capital International, characterized the three-day surge above 2 trillion yuan as a positive yet cautious signal, reflecting sentiment repair and capital repatriation. The limited magnitude of volume expansion points to a structural rebound rather than the launch of a new trend phase.

Yu Fenghui, advisor to the Hong Kong Stock Exchange 100 Research Center, noted the turnover recovery indicates the market has largely digested the major macroeconomic uncertainty of global central bank rate hikes, with funds test-buying at lower levels. He cautioned against describing it as a trend reversal, emphasizing the need to observe whether volume can stabilize.

To hold or not to hold over the holiday?

The perennial question of whether to hold stocks or cash through extended breaks has resurfaced. Industry professionals suggest maintaining some market exposure while monitoring overseas rate fluctuations and geopolitical risks, with expectations that domestic factors such as third-quarter earnings forecasts will carry greater weight for A-shares.

Pan Jun argued against a simplistic approach based on holiday length, instead recommending retaining core positions backed by fundamental strength, while preserving flexible cash reserves, reducing leverage, and lowering thematic concentration. "There is still a trading window between the Mid-Autumn Festival and National Day this year," he said. "Investors can adjust their portfolios based on new information. For companies with deliverable earnings and reasonable valuations, there is no reason to liquidate merely because of a holiday. For holdings with large gains driven primarily by sentiment or single-event catalysts, risk control is appropriate."

Looking beyond third-quarter earnings, Pan identified the overseas "inflation-rate-valuation" transmission chain as a key holiday variable. With the Federal Reserve having announced a 25-basis-point rate hike in mid-September, overseas liquidity easing cannot be assumed as a default. He flagged the US personal consumption expenditures price data due September 30 and non-farm payroll figures on October 2 as critical observation points.

Li Qian cited historical patterns showing that holding stocks through the holiday offers better cost-effectiveness, as leveraged funds typically flow out before holidays and return afterward, often driving market recovery. Nevertheless, given overseas uncertainties during the break, reasonable position sizing is more prudent than an all-in or all-out binary choice.

Wen Tianna noted that with combined market closures of three days for Mid-Autumn and seven days for National Day, historical odds favor post-holiday increases. Most institutions lean toward medium-to-high position levels, recommending reduced exposure to high-volatility short-term trades while maintaining core holdings and keeping flexible cash in money market instruments to balance risk avoidance with the danger of missing rallies.

Regarding overseas volatility during the break, Wen highlighted the need to track US Treasury yields following the Fed's rate decision, resilience in US tech stocks, and geopolitical developments. Absent major external shocks, A-shares will likely respond primarily to domestic dynamics.

Yu Fenghui stressed that the hold-or-cash decision depends on which specific assets are held. Historical patterns show better win rates for holding stocks over the National Day break, with the risk of missing rallies outweighing the risk of staying invested. However, this year's three-trading-day gap between the two holidays may cause capital to naturally contract. The more critical factor is not the binary choice but the composition of holdings, with institutional consensus favoring a dual-track approach of "tech growth plus dividend defensive" rather than one-sided bets.

Investors should also weigh two overseas variables: potential further rate hikes by the Fed and other central banks, with Chairman Warsh's hawkish tone keeping alive expectations of another increase this year that could pressure growth valuations if Treasury yields climb again, and the impact of holiday-period geopolitical conflicts and oil price movements on post-holiday opening sentiment.

Growth or value?

On allocation strategy, industry experts advocate balanced diversification rather than concentrated positioning in a single direction.

Pan Jun described the baseline style judgment as "earnings-driven growth for rebound offense, high-dividend value for allocation stability," with no current basis for a full-scale shift to either extreme. While overseas AI risk appetite has recently improved, providing sentiment catalysts for related A-share sectors, he cautioned that a genuine AI revival cannot rely solely on external market moves. Investors must distinguish between "overseas valuation rebounds" and "domestic earnings expectation upgrades." If overseas gains coincide with substantive improvements in cloud capital expenditures, computing power demand, and supply chain orders, then domestic optical module, PCB, and liquid cooling companies with real customers and profit delivery deserve closer study. Without corresponding domestic order and earnings improvements, rallies risk remaining short-term reflections of external moves. For AI applications, the focus should be on verifying paying users, revenue, and commercialization efficiency.

Should overseas rates and oil prices continue climbing while domestic turnover shrinks again, Pan suggested that high-dividend value stocks with stable cash flows and sustainable payouts may show relative outperformance, though dividend yields do not immunize against drawdown risk.

Li Qian pointed to clear calendar effects, with defensive styles such as consumer and heavily-held fund positions typically outperforming before holidays, while growth styles, particularly small and mid-cap tech, tend to show greater elasticity after uncertainty resolves. Small caps often lead initial moves. The AI sector's medium-to-long-term industrial trend has not reversed, but short-term consolidation and differentiation are likely, contingent on third-quarter earnings delivery.

Wen Tianna assessed that high-dividend names retain defensive value in the near term, but growth sectors, especially AI computing power, optical modules, and PCB, have largely completed valuation adjustments. Institutions favor their potential re-emergence before year-end, with AI-related sectors likely to continue repairing in tandem with overseas markets, subject to volume and policy catalysts. Investors should avoid blind chasing and maintain disciplined, balanced positioning.

Yu Fenghui noted that growth stocks offer greater short-term elasticity while high-dividend names provide portfolio protection. Following the rate hike conclusion, semiconductors and communications equipment have led gains, making a balanced mix of growth and value the more prudent course. He cautioned that high-dividend yields do not necessarily guarantee robust defensive performance in the immediate pre-holiday period.

Recent record highs on the Nasdaq and strong rallies in AI chip stocks have directly boosted A-share AI sentiment. Yet whether the market can transition from sentiment repair to trend re-rating will depend on the pace of industrial catalyst realization and shifts in overseas rate trajectories.