Qilu Evening News · Qilu Yidian Reporter Huang Shougeng

On the last trading day before the National Day long holiday, A-shares ended mixed, with some indices rising and others falling, and trading volume remaining low. Whether to hold stocks or cash is a question that is revisited every year, and this year there is no consensus on the answer. Regarding the market outlook, most institutions suggest holding stocks, but they differ in their judgment of the rebound's magnitude. The area with the highest overlap in allocation is the AI industry chain, especially computing hardware.

Shanghai Composite Index closed higher, STAR 50 fell another 2.51%

On September 30, the three major indices showed divergent trends. The Shanghai Composite Index closed at 3,842.19 points, up 0.31%; the Shenzhen Component Index closed at 12,887.62 points, down 0.11%; the ChiNext Index closed at 3,135.28 points, down 0.23%. The STAR 50 Index dropped 2.51% to 1,530.01 points, making it the major index with the largest decline that day; the Beijing 50 Index rose 0.70% against the trend. Behind the index divergence, heavyweight stocks supported the Shanghai Composite, while the technology sector continued to bleed.

Trading volume remains at a low level. The combined turnover of the Shanghai, Shenzhen, and Beijing markets for the whole day was about 1.45 trillion yuan, an increase of about 28.5 billion yuan compared to the previous trading day. A total of 2,567 stocks in the market rose, 2,824 stocks fell, 56 stocks hit the daily limit up, and 12 stocks hit the daily limit down.

By industry, pharmaceuticals and biotechnology rose 2.73%, beauty and personal care rose 1.70%, and food and beverages rose 1.68%, ranking the top three among Shenwan first-level industries; electronics fell 2.38%, computers fell 0.98%, and machinery and equipment fell 0.90%, ranking the top three in declines. At the stock level, pharmaceutical stocks like CanSino and Menova hit the daily limit, Shenzhen Property A experienced an intraday "floor-to-ceiling" move, and Vanke A rose more than 4.4%; on the other hand, Aohong Electronics and Xiehe Electronics hit the daily limit down, and STAR Market heavyweights such as SMIC and Cambricon weakened.

The direction of capital flow is consistent with the market. Wind data shows that the pharmaceutical and biological sector saw a net inflow of over 12.7 billion yuan from major funds in a single day, and the electric power equipment sector over 3.1 billion yuan; electronics experienced a net outflow of over 17.6 billion yuan, communications over 3.6 billion yuan, and computers over 1.9 billion yuan.

Over the course of September, all indices pulled back. The Shanghai Composite Index fell by 3.62%, the Shenzhen Component Index dropped by 8.04%, the ChiNext Index fell by 8.82%, and the STAR 50 Index declined by 9.17%. Both trading volume and leverage contracted simultaneously. According to Wind data, the total market turnover in September was 38.46 trillion yuan, with a daily average of 1.83 trillion yuan, down 18.6% from August's daily average of 2.25 trillion yuan. The highest daily turnover during the month occurred on September 22 at 2.15 trillion yuan, while the lowest was on September 29 at 1.42 trillion yuan.

Multiple institutions tend to hold stocks over the holidays

Regarding the market trend in the coming period, most institutions suggest holding stocks but controlling the position size. The first reason provided by the institutions is seasonal patterns. Liu Chenming, chief strategist at GF Securities, compiled statistics showing that from 2011 to 2025 (excluding 2024), during the first week after the National Day holiday, the average return of the Wind All-A Index was 1.69%, with an upward probability of 79%. Huatai Securities, looking back at nearly 20 years of data, takes a more conservative view: the median return of the Shanghai Composite Index in the 10 trading days before the holiday was -1.21%, with a winning rate of 38.1%, while the winning rate increased to 66.7% in the five trading days after the holiday.

According to Xu Jinfeng, Chief Strategy Analyst at Caitong Securities, the probability of an increase is 67% two days before the holiday and 80% five days after the holiday. Chen Gang, Chief Strategy Analyst at Dongwu Securities, summarized four other patterns: the two trading days before the holiday are often a window for positioning, with trading volume 'shrinking before the holiday and expanding after the holiday'; the market and consumer stocks tend to perform better before the holiday, while small-cap stocks are more flexible afterward; and the post-holiday winning probability of banks and non-bank financials rises.

At the same time, Liu Chenming also pointed out that the market has shrunk by about 50% since the high in July, and the current trading volume has gradually stabilized. At this time, further reducing positions could 'easily miss the potential rebound opportunity after the holiday'.

In addition, the institutions mentioned that the current negative factors have already been priced in. GF Securities believes that the market has already made sufficient expectations regarding the Federal Reserve's interest rate hike, progress in the AI industry, and the China-US meeting, and that news during the National Day period is likely to remain stable. Deng Lijun, Chief Strategy Analyst at Huajin Securities, argued from three aspects—policy being relatively positive, liquidity remaining loose, and fundamentals of earnings continuing to recover—that the short-term buying window has opened.

How big is the divergence in this wave of rebound?

Under consensus, institutions do not have a uniform judgment on the level of the rebound. CITIC Securities is relatively optimistic. Its chief A-share strategist Qiu Xiang believes that when corporate profit trends are upward, the probability of a significant index adjustment is very low. The period around the third-quarter report is the 'last offensive window' for 2026, and it is recommended to respond to volatility with an 'AI + energy and chemical' portfolio. Guotai Haitong's chief strategy analyst Fang Yi is optimistic about the 'golden autumn market' recovery, believing that diffusion and balance are the main characteristics.

Huatai Securities and Shenwan Hongyuan have clearly classified the current situation as a small-scale rebound, believing that for the rest of 2026, the main tone will be oscillation and consolidation; Shenwan Hongyuan further judges that for the technology sector to enter a large-scale main upward trend, it still requires significant AI industry catalysts, which are not currently in place.

There are more direct disagreements regarding dividend assets. China Galaxy Securities, Guosen Securities, Everbright Securities, and Xiangcai Securities all recommend retaining a base holding of dividends to hedge against volatility; Guangfa Securities holds the opposite view — dividends still have a winning probability, but the odds have narrowed compared to mid-year, and 'the expected return is not as high as on June 30.' Yang Chao, chief strategy analyst at China Galaxy Securities, takes a moderate stance: after the holiday, A-shares are expected to recover, but the focus will still be on structural and rotational recovery.

The area with the highest overlap in terms of allocation is the AI industry chain, especially computing hardware. Zhongtai Securities recommends a 'technology offensive, energy security hedge' strategy: hold the STAR 50, domestic semiconductor equipment, and storage, while also allocating to chemicals, power equipment, and oil transportation to hedge against oil prices and geopolitical risks. CITIC Securities strategy analyst Xia Fanjie highlighted the price increase segments due to tight computing supply: optical chips, PCB manufacturing, CCL, complete servers, as well as industrial non-ferrous metals like copper, aluminum, and tin. Guangfa Securities estimates that historically, during the first week after the National Day holiday, TMT has the highest probability of outperforming the whole A-share market among major style indexes, reaching 73%.

Risks have also been repeatedly mentioned. Huaxin Securities reminded that the trade friction escalation in 2018 and the aggressive interest rate hikes by the Federal Reserve in 2022 both interrupted the post-holiday market trends; China Merchants Securities pointed out that as calendar effects have become widely recognized, in the past two years there has been 'pre-holiday rushing,' and pre-holiday weakness cannot be directly interpreted as post-holiday gains.

Overall, institutions generally believe that four things still need to be verified: the progress of China-US economic and trade consultations, whether the domestic fiscal and material workload can be implemented, the stance of the Federal Reserve at the FOMC meeting at the end of October, and whether the third-quarter reports in October can meet the performance expectations of the AI industry chain. The PMI returned to the expansion range in September, which can be seen as a start for the last item.

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