A-Share Trading Volume Plunges 370 Billion Yuan as Pre-Holiday Effect Kicks In

Market Overview

On September 23, the broader market experienced a volatile consolidation session, with the ChiNext Index and the Shenzhen Component Index opening higher but closing lower. By the close:

• Shanghai Composite Index: Fell 0.39%
• Shenzhen Component Index: Declined 0.64%
• ChiNext Index: Dropped 0.6%

Sector Performance

• Gainers: PCB concept stocks strengthened; CRO and quantum technology sectors showed active trading.
• Losers: Media and film/TV sectors experienced volatile declines.
• Real estate: Stocks showed divergence.

Trading Volume and Market Breadth

• Over 3,500 individual stocks declined.
• Trading volume shrank significantly. Total turnover on the Shanghai and Shenzhen stock exchanges reached 1.76 trillion yuan, a decrease of 370.6 billion yuan from the previous trading day.

"Pre-Holiday Effect" Emerges

Due to the market being closed on Friday, Wednesday (today) became the "cash-out day" for A-shares this week.

The "pre-holiday effect" is becoming evident. By the close, total market turnover stood at only 1.7831 trillion yuan, down more than 370 billion yuan from the prior day. All three major indices closed lower, with more stocks falling than rising.

This suggests that Tuesday's "preemptive exit" by some funds was not merely a joke.

Historical Context

In our Monday review, we noted that in 4 out of the past 5 years, the market experienced volume contraction before the National Day holiday, with reductions sometimes around 10% or even exceeding 20%.

Based on the average daily turnover of 1.93 trillion yuan over the past 20 trading days (August 26 to September 22), if this year's "pre-holiday effect" triggers a roughly 10% contraction, volume would fluctuate around 1.74 trillion yuan.

Today's figure of 1.78 trillion yuan falls close to this estimate, potentially marking the onset of the "pre-holiday contraction."

Impact of Volume Decline

The sharp drop in trading volume affected the market in at least two ways:

1. High-Profile Speculative Stocks Retreat

• C-zhongsu, which surged 683% the previous day, reversed sharply, falling 34.53% today.
• Many stocks that hit the daily limit down or fell by 10% or more were either multi-day limit-up stocks or hot stocks that hit new highs yesterday, including:
• Wuzhou Medical
• Huamei Holdings
• Sanyangma
• Mindong Electric Power
• Xinhua Pharmaceutical

The lack of active funds made it difficult for these high-volatility stocks to absorb selling pressure, forcing them to move downward.

2. Large-Cap Stocks Also See Significant Volume Decline

Stocks with moderate recent gains but requiring liquidity also experienced notable volume contraction.

• Zhongji Innolight, often ranking first in market turnover, saw its trading volume drop to 13.68 billion yuan today, a sharp decline from 22.337 billion yuan on Tuesday.
• According to Wind data, among the top 10 stocks by trading volume on Tuesday, today's volume contracted by at least 27% and by as much as 56%.

However, because these stocks have not experienced large recent fluctuations, their pullbacks were relatively "gentle." Given their high weighting in the indices, all three major indices only fluctuated in shallow waters and have not yet fallen below their 5-day moving averages.

Analyst Outlook

According to a research report from Datong Securities:

Although the impact of interest rate hikes has been absorbed by the market, the global wave of AI capital expenditure has entered a brief "accumulation phase," with upward momentum remaining weak. Combined with pre-holiday risk aversion, funds are unable to form a concerted upward force. In the absence of major news, the market may find it difficult to quickly identify a new main theme.

Therefore, the short-term market is expected to maintain a "no-main-theme" characteristic, with frequent sector rotation becoming the norm. However, barring major events, volatility is likely to remain relatively moderate. In the medium to long term, the market is still expected to return to the technology theme.

Sector Rotation

The contraction in volume has forced remaining active funds to rotate from high to low positions.

According to Flush data:

• Among the top 10 declining sectors, apart from oil & gas, power, and diversified financials (which have been falling consecutively), all others were sectors that either led gains on Tuesday or experienced a rally followed by a pullback.
• On the concept index gainers list, today's leading sectors—such as PCB, glass substrates, and lab-grown diamonds—had performed relatively poorly on Monday and Tuesday.

This pattern is consistent with the so-called rotation market.

Key News Drivers

BOE's Investment Announcement

BOE Chairman Chen Yanshun announced at the 2026 BOE Global Innovation Partner Conference that the company will invest over 800 billion yuan in R&D over the next five years, with procurement spending exceeding 800 billion yuan. He also confirmed that within the next year, BOE will finalize investment plans for two mass production lines: glass-based perovskite devices and glass-based packaging substrates. This news sparked short-term interest in related sectors.

PCB Sector Outlook

Institutional research reports indicate that as upstream raw material prices continue to rise, downstream PCB manufacturers have recently begun re-quoting prices. This move signals that the cost transmission mechanism—from upstream raw materials to midstream copper-clad laminates to downstream PCBs—has been fully unblocked. The market generally expects that Q3 2026 will mark the substantive starting point for profit improvement across the entire industry chain.

Cover image source: National Business Daily Media Library