China Galaxy Strategy: How Will the Post-Holiday Market Unfold?

Important Events Review During the Spring Festival Holiday: (1) Global Perspective: Trade policy uncertainties re-emerge, with the U.S. Supreme Court ruling that the Trump administration’s large-scale tariff policies are illegal. Trump announced plans to impose a 15% import tariff on global goods; January monetary policy meeting minutes show clear disagreements within the Federal Reserve regarding the outlook for monetary policy; geopolitical tensions persist, with ongoing tensions between Iran and the U.S. and its allies. (2) Domestic Perspective: Travel during the Spring Festival is booming, with an estimated 5.08 billion cross-regional passenger trips in the first 20 days of the Spring Festival travel season, averaging 250 million per day, setting a new historical high for the same period; as of the evening of the 21st, the total box office for Spring Festival films (including pre-sales) has exceeded 4.4 billion yuan; technology themes became a focus during the holiday, with CCTV’s Spring Festival Gala driving a consumer boom for humanoid robots and related products.

How to Strategically Layout the Post-Holiday Market from Three Perspectives: (1) Policy: Stabilize expectations + increase incremental growth. Since September 24, 2024, A-shares have seen a series of policy supports aimed at stabilizing expectations and boosting incremental growth, promoting high-quality development of the capital market, enhancing investor confidence, and injecting more liquidity. With the upcoming “Two Sessions” after the Spring Festival, the market may preemptively position itself around policy expectations. The “Two Sessions” are expected to focus on key areas such as domestic demand-led growth, innovation-driven development, reform breakthroughs, and opening-up. Under the resonance of policy dividends and industrial upgrades, the long-term stable operation of the A-share market will be further solidified. (2) Liquidity: How do the three prices—exchange rate, interest rate, and China-U.S. interest rate differential—indicate the direction of A-shares? Analysis shows that liquidity supports A-shares through these three factors. Since 2025, foreign investment preferences for A-shares have rebounded, with significant allocations in the technology sector, far exceeding other industries. Post-holiday, factors such as household savings deposits moving, “fixed income +” funds entering the market, and wealth management funds participating are likely to benefit A-shares. (3) Escalating Geopolitical Conflicts—Current Market Sentiment Risks. During the Spring Festival, uncertainties in global trade policies and geopolitical tensions increased, causing short-term disruptions to capital markets but not altering the medium-term trend. Structurally, geopolitical tensions have a pulse-like positive effect on crude oil prices; if the Iran-U.S. situation worsens, crude prices could rise long-term. Meanwhile, precious metals become safe-haven assets, benefiting related sectors.

Market Outlook and Investment Structure: Post-holiday, with policy expectations, liquidity support, and industry trends catalyzing, the market is likely to oscillate upward, but close attention should be paid to short-term market sentiment disruptions caused by overseas uncertainties. Around the “Two Sessions,” the A-share market may be driven primarily by policy catalysts, with capital competing around policy-guided industry themes and thematic opportunities, characterized by “policy hot spots rotating and style switching rapidly.” In March, the market logic will gradually shift from “policy expectations” to “performance realization,” with 2025 annual reports and the first quarter of 2026 reports serving as key anchors. Stocks with earnings surprises may attract capital. Key allocation opportunities include: First, the “anti-involution” concept driven by improved supply-demand dynamics and industry profit recovery, as well as dividend assets with valuation safety margins. The allocation logic remains clear—focus on non-ferrous metals (precious metals), oil and petrochemicals, as well as basic chemicals, steel, cement, building materials, and financial sectors benefiting from price increases. Second, during the Spring Festival, hot topics such as robotics and AI large models received widespread attention, and post-holiday, structural highlights are expected. As the world accelerates through unprecedented changes, the domestic economic logic shifts toward new productive forces, with key areas such as semiconductors, artificial intelligence, new energy, military industry, and aerospace worth关注。

Risk Warning: External uncertainties; policy risks falling short of expectations; market sentiment instability and ongoing liquidity adjustments.

(Source: Galaxy Securities)