As the Lunar New Year approaches, China’s stock market faces its annual ritual: a long, calendar‑bookended pause and the perennial investor question of whether to hold equities through the holiday or sit in cash. The Shanghai Composite hovered near 4,128 on February 10, trading in muted volumes ahead of a nine‑day market shutdown, while exchanges prepare for a week‑plus closure that will leave traders unable to respond to any major headlines.
History offers a partial answer. Wind data show that between 2016 and 2025 the Shanghai Composite rose in 70% of the years during both the first five and the first ten trading days after the Spring Festival. The longer window has generally delivered the better returns, suggesting a pattern of post‑holiday recovery that market participants have come to treat as a “calendar effect.”
The present market profile is consistent with that seasonal narrative but layered with qualification. Trading value shrank to roughly CNY 2.11 trillion on February 10, and indices moved unevenly: the Shanghai Composite gained modestly while the ChiNext fell. Year‑to‑date gains sit in the low single digits, and sector performance has been bifurcated — media, construction materials and basic chemicals have outperformed while banks and agricultural stocks lag.
Institutional research notes a clearer stylistic shift in recent weeks: funds have bled away from richly valued tech and cyclical names into high‑dividend, consumer and defensive sectors. Galaxy Securities and other houses characterise the market’s immediate behaviour as “pre‑holiday risk aversion”: lower volumes, defensive leadership and a rotation that typically sets the stage for a renewed post‑holiday advance.
Market strategists interviewed by the press recommend a risk‑calibrated approach rather than an all‑or‑nothing posture. Analysts suggest maintaining some exposure through the break — a ‘lightly positioned’ stance — while conservative investors may trim equities and park part of their capital in short‑duration cash instruments. For those prepared to stay invested through the spring rebound, recommended sectors include technology growth themes such as AI applications and semiconductors, and high‑momentum new‑energy segments such as HJT batteries and offshore wind equipment.
Retail behaviour mirrors the split in professional guidance. Some individual investors said they were using year‑end bonuses to add to bank shares and treat dividends like fixed income, while others planned to reduce exposure and buy money‑market and short‑term bond funds for stability. That divergence underscores a broader tension: the historical odds of a post‑holiday rally versus the risk of a gap move over an unusually long, news‑stopping holiday.
For global investors and allocators, the immediate lesson is pragmatic. The post‑holiday tendency in A‑shares matters because it amplifies the gains for those who keep exposure, but the extended closure magnifies tail risks from policy announcements, macro surprises or geopolitics. A light equity stance that preserves participation in a likely spring upswing while limiting vulnerability to unforeseen shocks is the compromise most Chinese analysts are advocating.