Dongwu Strategy: Historically, the "Spring Festival Effect" in A-shares has been prominent and is expected to start positively

Global Market Overview During the Holiday

During the Spring Festival holiday period (stock and commodity markets with a fluctuation range of February 16 to February 20; bond and foreign exchange markets examined at the closing prices on February 13 and the latest closing prices as of February 22),

Stock Markets: Hong Kong stocks had only one and a half trading days, with overall fluctuations and a downward trend. On February 16, the index bottomed out and then rebounded, closing slightly higher; on February 20, the index opened lower and declined. During the holiday, the Hang Seng Index saw a slight decline, with Hang Seng Tech falling nearly 3%. U.S. stocks traded over four days, with the three major indices fluctuating and strengthening, led by the Nasdaq, which rose 1.5%. The S&P 500 increased over 1%, while the Dow had a smaller gain. The Nasdaq China Golden Dragon Index weakened alongside Hong Kong stocks, closing slightly lower. European markets generally rose, with the UK and France indices both up over 2%. The Asia-Pacific markets showed mixed performance, with South Korea’s Kospi rising over 5%, leading major global markets, while the Nikkei 225 index edged down slightly.

Commodities: Overall gains, with precious metals performing strongly and oil prices continuing to rebound.

Foreign Exchange: The US dollar rebounded from lows, and offshore RMB broke above 6.9.

Bond Market: The yield on the 10-year US Treasury rebounded.

Overseas Macro

United States: The Supreme Court ruled that reciprocal tariffs are illegal, and Trump re-signed an administrative order on tariffs. The Federal Reserve’s January meeting minutes showed significant internal disagreement, with multiple officials supporting a dual-direction approach to future interest rate decisions.

Global Political and Economic Developments: US-Iran negotiations have stalled, with each side setting deadlines for the process. High Minister Suga Yoshihide confirmed her election as Prime Minister and will strive to pass key legislation, including the tax reform law for the 2026/27 fiscal year, before the end of this fiscal year.

Domestic Macro

Spring Festival Travel and Consumption: Travel intensity increased, with the total interregional population flow in the first six days of the holiday surpassing the return-home phase of the Spring Festival travel rush. Consumption experienced a strong start, with robust demand for goods and vibrant service consumption. The tourism market was highly active, with “segmented” New Year celebrations becoming popular, featuring “southward escape for warmth” and “northward ice and snow” themes, along with increased inbound and outbound tourism. Box office revenue declined noticeably.

Policies: China will implement zero tariffs for 53 African countries with diplomatic relations; efforts will be increased to guide and cultivate rural enterprises to list on capital markets, helping more companies access financing through multi-tiered markets; three departments issued policies supporting technological innovation and import tax incentives during the 14th Five-Year Plan period.

Industry Dynamics

AI and General AI: The Spring Festival Gala featured a large lineup of “black technology,” mainly focusing on AI and robotics; Anthropic released Claude Sonnet 4.6 and safety tools; OpenAI lowered its expenditure targets, while Nvidia plans to invest $30 billion in OpenAI, replacing a previous $100 billion collaboration plan. In domestic models, the Doubao large model 2.0 was officially released, Alibaba Cloud Qwen 3.5-Plus launched with performance comparable to Gemini 3 Pro, and Zhipu started recruiting “computing power partners.” On the device side, Apple is accelerating the development of three new wearable devices, including AI glasses, accessories, and camera-equipped AirPods. In computing power, Meta commits to deploying millions of Nvidia chips in the coming years, adopting Grace CPUs for the first time; ByteDance’s chip team will begin large-scale recruitment, with multiple cloud chips already mass-produced and deployed.

Other Industries: SpaceX reportedly plans to adopt a dual-class share structure in its IPO to strengthen Musk’s control.

Post-Holiday A-Share Outlook

Historically, the “Spring Festival effect” in A-shares is prominent, and post-holiday funds are expected to “revive” and drive a resonance of volume and price recovery, suggesting a positive start for A-shares. During the holiday, most global stock markets rose, with overall risk appetite improving. Liquidity-wise, although the Fed’s rate cut path remains uncertain, market expectations for liquidity throughout the year have not significantly worsened; offshore RMB exchange rates remained stable during the holiday. Domestic demand is steadily recovering. Industry trends, including robotics and domestic large models, continued to ferment during the holiday. Looking ahead, the upcoming Two Sessions will further reinforce market stability expectations. White House officials confirmed Trump’s planned visit to China at the end of March, which will help stabilize external environment expectations. We remain optimistic about the post-holiday performance of A-shares.

In terms of allocation, focus on medium-term industry trend certainty (with greater resilience after mispricing) and the reversal of the pro-cyclicality dilemma (lacking odds before the full recovery of traditional economy but with defensive attributes). Key areas include: 1) AI and general AI sectors’ cloud, domestic chip manufacturing (semiconductor equipment, materials, packaging/testing), CPO-related segments, AI power infrastructure such as gas turbines and liquid-cooled diesel generators, robotics supply chain; 2) emerging industries during the 14th Five-Year Plan, such as commercial aerospace, quantum, hydrogen energy, brain-computer interfaces; 3) pro-cyclic sectors like chemicals, building materials, leading consumer brands, engineering machinery; 4) energy storage and strategic resources (rare earths, etc.).

Risk warnings: Economic growth below expectations; policy implementation delays; geopolitical risks; overseas rate cut pace and uncertainties in Trump administration’s China policies.

(Source: Dongwu Securities)