Institutions Advise Holding Stocks Ahead of National Day Holiday: Historical Data Shows High Post-Holiday Rally Probability
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As China's National Day holiday approaches, multiple market analysts have weighed in on whether investors should hold stocks or cash. Chen Xuan, general manager of Feixiong Brothers Investment, recommends holding stocks but controlling positions, citing limited downside risk and high historical probability of post-holiday gains. He notes that the Shanghai Composite Index has a strong track record of rising in the five trading days after the holiday, with a 67% win rate for the two days before and 80% for the five days after, according to Xu Jinfeng of Caitong Securities. Xu suggests using free cash flow 'HALO' assets as a core holding, focusing on sectors like aviation, security equipment, chemicals, waste treatment, semiconductor equipment, MLCCs, innovative drugs, and engineering machinery. Xia Fanjie recommends a balanced allocation with offensive positions in optical chips, PCB, copper, aluminum, and industrial metals, while defensive holdings in dividend stocks and flexible positions in agriculture, medical aesthetics, and textiles. Zhongjin Company highlights communications PCB and memory chips. Qiu Xiang suggests focusing on optical communication technology, PCB, advanced packaging, communications, media, computers, electric power, and non-ferrous metals. The article is sourced from China Securities Journal.
Source report
As the National Day holiday approaches, investors are weighing the decision to hold stocks or cash. Several market experts have shared their assessments based on pre- and post-holiday trends, recovery conditions, and allocation strategies.
Holding Stocks Through the Holiday: How to Manage the Pace
Chen Xuan, General Manager of Feixuan Brothers Investment, recommends holding stocks over the holiday, but with controlled positions. He notes that the downside risk in the current market is limited, and the risk of missing out on a rally by exiting is greater than the risk of holding through potential negative events.
Historical data shows that the Shanghai Composite Index has a high probability of rising in the five trading days after the National Day holiday, with a notable recovery pattern. Combined with growing bullish sentiment, Chen advises holding stocks and believes the A-share market is likely to gradually stage a recovery, with the Shanghai Composite Index potentially breaking upward before the holiday.
Xu Jinfeng from Caitong Securities reviewed the calendar effect around the National Day period and found that:
- The week before the holiday often sees shrinking volumes and market corrections.
- The market tends to bottom out one to two days before the holiday.
- After the holiday, trading volume picks up, with an initial one-week rally.
- The winning rate for the two days before National Day and the five days after is 67% and 80%, respectively.
- Fund holdings tend to outperform before the holiday, while small-cap stocks perform better after the holiday.
What Else Matters for a Recovery?
- Dongfang Securities: Focus on industrial metals and semiconductors.
- CITIC Securities: No specific sectors mentioned.
- China Galaxy Securities: No specific sectors mentioned.
- CITIC Securities: No specific sectors mentioned.
Which Directions to Focus On?
Xu Jinfeng suggests using the free cash flow "HALO" strategy as a cornerstone, and recommends focusing on:
- Air transport
- Security equipment
- Express delivery
- Chemical products
- Solid waste treatment
- Semiconductor equipment
- MLCCs (Multi-layer Ceramic Capacitors)
- Innovative drugs
- Engineering machinery
Xia Fanjie recommends a balanced allocation with layered positioning:
- Offensive direction: Focus on the computing power supply chain, including optical chips and PCB (Printed Circuit Board) where supply is tight and prices continue to rise, as well as copper, aluminum, and industrial metals.
- Defensive position: Allocate to dividend-yielding assets.
- Flexible allocation: Consider agriculture, medical aesthetics, and textile and apparel.
China International Capital Corporation (CICC) highlights:
- Communication
- PCB
- Memory chips
Qiu Xiang suggests focusing on areas driven by increasing manufacturing complexity, including:
- New optical communication technologies
- PCB
- Advanced packaging
- Communication (short-term trend)
- Media
- Computers
- Electric power
- Non-ferrous metals
(Source: China Securities Journal)
Source
东方财富网-市场精华Eastern
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Chinese Analysts Advise Holding Stocks Over National Holiday, Citing 80% Post-Festival Rally Odds