Institutions Assess Post-Holiday Market: Rebound Sustainability Hinges on Four Key Variables

As the Mid-Autumn Festival and National Day holidays approach, multiple institutions have released their assessments of the market outlook. Divergent interpretations center on two main areas:

• The magnitude of the current rebound: Most institutions take a middle-ground stance, acknowledging a structural rebound but not supporting a trend reversal. Some judge that the market has entered an offensive window, while others view it as only a minor repair, with the year overall characterized by consolidation and volatility.
• The allocation value of dividend-yielding assets: Some institutions regard them as defensive positions in a volatile environment, while others argue that the risk-reward ratio for dividend sectors has already declined, making them unsuitable as a core allocation.

Four key questions have drawn market attention regarding the trajectory during this holiday period.

Question 1: What Is the Broader Trend?

Mainstream view: Structural rebound.

Most brokerages agree that negative factors have been partially priced in, and the market is expected to undergo short-term consolidation and repair. However, opinions differ on whether this rebound is a minor repair or a window for offensive positioning within the year.

Question 2: How Will the Market Perform Around the Holidays?

Pre-holiday capital避险 suppresses trading; post-holiday recovery is more likely.

Looking at the upcoming holiday window, several brokerages have reviewed historical data. Due to cross-holiday risk premiums and quarter-end institutional rebalancing, the market tends to see capital避险 behavior before the holidays. A weak pre-holiday and recovery post-holiday pattern is a notable calendar effect.

• Huatai Securities, reviewing 20 years of A-share data, found that the median return for the 10 trading days before National Day is negative, while the probability of recovery in the five trading days after the holiday increases significantly. It also corrected the conventional belief that dividend-yielding styles offer pre-holiday defensive properties.
• Caitong Securities, citing the National Day calendar effect, believes downside risk is limited and suggests holding stocks through the holiday may be more advantageous.

Question 3: How Should Sectors Be Allocated?

Core theme: AI computing hardware, with increasing divergence within the sector.

Institutional allocation is highly concentrated on the AI industry chain. Brokerages offer varying sub-sector choices based on their own logic, generally pairing policy-linked and alpha tracks as hedges. Views on dividend sectors remain divided.

• CITIC Securities believes that Hang Seng Tech valuations remain low and volatile, with sector pricing shifting toward liquidity expectations, earnings resilience, and cash flow. The second half of the year will revolve around AI implementation progress and core business earnings certainty. It recommends focusing on model iteration and agent commercialization catalysts at leading internet companies, while also selecting stocks with solid earnings, cash flow, and shareholder returns.
• China Galaxy Securities adopts a "Technology + Policy + Dividend" allocation framework, targeting semiconductor advanced packaging, communications, engineering machinery, public utilities, and coal in the technology sector.

Question 4: What Key Factors Should Be Monitored Going Forward?

Four key variables will determine the sustainability of the rebound.

Based on broker research reports, four critical variables are seen as core observation dimensions for market pricing:

1. China-U.S. economic and trade consultations – China Galaxy Securities places this as the top short-term risk factor. Signals from consultations will directly affect the risk premium on renminbi assets and transmit expectations to export and tech sectors.
2. Domestic fiscal spending implementation – GF Securities focuses on domestic fundamentals. The current economy shows stronger production but weaker consumption and investment. With Q4 government and local bond issuance delayed, whether fiscal funds can effectively translate into real economic activity is key to supporting fundamentals.
3. Federal Reserve policy signals – Overseas, the Fed's September rate cut has been delivered, but risks are not fully cleared, according to Soochow Securities.
4. AI industry catalysts and Q3 earnings verification – Both GF Securities and Soochow Securities emphasize that September to November is a dense window for AI catalysts, including AICC, the Yunqi Conference, overseas developer conferences, and a potential Anthropic IPO. Combined with overseas cloud capital expenditure guidance and Q3 earnings reports, real verification of AI industry orders and capex will determine how far growth sectors can go.

(Source: Cailianshe)