Only three trading days left before the long holiday: hold stocks or hold cash?

Title context: Only three trading days left before the long holiday: hold stocks or hold cash? Text: The seven-day National Day holiday is already in sight. Whether to carry positions through this long holiday has once again been put on the table. A review of brokerage strategy research reports over the past two weeks shows that, unlike previous years when "holding stocks through the holiday" was almost one-sided, this year the answers given by brokerages have clearly diverged: most institutions lean toward holding stocks, but on the criteria for win rates, the types of holdings, and position control, the disagreements are more noteworthy than the conclusions. First, win rates: three sets of criteria, three different temperatures The first answer brokerages give on this question is historical statistics. And with different statistical intervals, the temperature gap in the conclusions is quite obvious. Caitong's chief strategy analyst Xu Jinfeng gave the most optimistic view. After reviewing the calendar effect around National Day, he pointed out that in the week before the National Day holiday the market often adjusts on shrinking volume, bottoms in the 1 to 2 trading days before the holiday, and then restarts on expanding volume after the holiday; in terms of win rate, the win rates in the 2 trading days before the National Day holiday and the 5 trading days after the holiday reached 67% and 80%, respectively. On this basis, the institution judges that the current downside risk in the market is limited, and holding stocks through the National Day holiday may be more worthwhile. Huatai reviewed A-share market data over the past 20 years and gave a much "colder" set of figures: in the 10 trading days before National Day, the median interval return of the Shanghai Composite Index was -1.21%, with a win rate of only 38.1%; in the 5 trading days after the holiday, the win rate rose to 66.7%, with a median return of +1.57%. The pattern of weakness before the holiday and repair after it is robust, but the fact that "the pre-holiday win rate is below 40%" is precisely the half that is omitted from most optimistic narratives. BOC International gave a "reverse rule" from another angle. Based on a statistical review of the periods around National Day since 2016, the institution found that the Shanghai Composite Index shows obvious reverse characteristics before and after the holiday: if positive returns were recorded in the previous two weeks, pressure and pullbacks often follow in the two weeks after the holiday; if adjustments continued before the holiday, a restorative rebound is likely after the holiday. This means that the cost-effectiveness of holding stocks through the holiday depends to a large extent on how much the market has already risen in the two weeks before the holiday, rather than on the holiday itself. Tianfeng's chief strategy analyst Wu Kaida echoed this: at the broad-based index level, small caps were weaker than large caps before the holiday, while after the holiday all indices rose broadly and small caps showed greater elasticity; at the style level, consumer returns turned positive before the holiday, while finance and growth performed impressively after the holiday. Second, rhythm: why weak before the holiday and strong after? Several brokerages gave almost identical explanations in their research reports for the causes of this calendar effect. In "A-Share Strategy Weekly: Repair and the Next Change," Sinolink analyzed that the long holiday means a vacuum period in which trading cannot take place but uncertainty is abundant. Overseas markets open as usual, and geopolitics, oil prices, and exchange rates may all ferment during these days, to be digested all at once on the first trading day after the holiday. For institutions, combined with quarter-end assessments, locking in floating profits and reducing volatility is itself a rational choice. After the holiday, funds flow back, and as third-quarter earnings expectations begin to ferment, funds that had previously held back start looking for direction again, which is precisely the source of the broad post-holiday gains. Caitong further broke down the style rhythm: consumer outperforms before the holiday, and after the holiday growth comes first, then finance. The logic behind this is the combination of quarter-end fund repositioning and individual investors reducing positions to pass the holiday. Before the holiday, the directions held by funds are relatively stronger, while after the holiday, directions dominated by small caps and individual investors have greater elasticity. Third, disagreement: can dividend assets still defend? If "holding stocks" is the consensus of most brokerages, then "what to hold" is the starting point of disagreement, and dividend assets are the most contested area. In its research report, Huatai directly corrected a fixed market perception: dividends may not provide pre-holiday defense. Data show that since 2010, the CSI Dividend Index has underperformed the CSI 300 by an average of 0.95 percentage points, and over the past 10 years this gap has widened to 1.61 percentage points, with an absolute win rate of 31.2%, the lowest among style indices. GF SEC also took a reserved stance. The institution believes that this round of the AI market is driven by earnings, and after the pullback valuations have been sufficiently digested, so third-quarter earnings targets with high prosperity should be prioritized; dividend assets still have defensive attributes, but their odds have declined and they should not be a key allocation direction. But the opposing view is equally clear. China Galaxy Securities chief strategy analyst Yang Chao warned that the cross-holiday risk premium combined with quarter-end institutional assessment constraints may keep the market in a state of oscillation and rotation, while overseas high interest rates and energy risks have not yet cleared, and dividend assets such as finance, utilities, and coal still have value as bottom-position allocations. China Securities Co.,Ltd. strategy analyst Xia Fanjie also suggested using dividend assets as a bottom position on the defensive side to hedge volatility. Fourth, varieties: AI computing power hardware is the most chosen On the offensive side, brokerages' concentration is far higher than on the defensive side - the AI industry chain, especially computing power hardware, is an almost unanimous choice, with differences only in the segmented links. CITIC SEC chief A-share strategist Qiu Xiang proposed in "Strategy Focus: The Last Offensive Window of the Year" that in the later stage of an industrial super-cycle, after institutional favorites peak there is usually a round of new highs in non-institutional names. From the perspective of short-term sentiment and the chip cycle, combined with third-quarter earnings catalysts, the market has the soil for active funds to attack new technologies and new themes, and it is advisable to actively seize the last offensive window of the year; in allocation, pay attention to new optical communication technologies, PCB, and advanced packaging driven by increased manufacturing complexity, as well as wafer manufacturing and gas turbines with clear volume-growth logic. China Securities Co.,Ltd.'s Xia Fanjie suggested balanced allocation and layered positioning: on the offensive side, prioritize optical chips, PCB manufacturing, CCL, and server complete machines in the computing power industry chain where supply is tight and products continue to raise prices, as well as industrial metals such as copper, aluminum, and tin. CICC Research Department chief China strategist Li Qiusuo pointed out divergence: earnings in AI hardware segments are generally growing rapidly, but segments with low barriers and fast capacity deployment need attention to supply-demand pressure; segments such as optical communications, PCB, and memory chips still have relatively strong certainty of high prosperity during the year, while some computing power chip companies need attention to the degree of matching between fundamentals and valuations. Orient Research senior asset allocation analyst Zheng Yueling gave another set of signals from price factors: communications has a short-term trend, while media, computers, power equipment, and nonferrous metals and other industries have reversal signals. What will verify it after the holiday? Third-quarter earnings and four variables For investors holding stocks through the holiday, the real test comes after the holiday. Based on brokerage research reports, China-U.S. economic and trade consultations, the implementation of domestic fiscal real work, subsequent Federal Reserve policy statements, and verification of the AI industry and third-quarter earnings are regarded as the four key variables determining the sustainability of this rebound. Soochow's judgment is that after the interest rate hike "boot lands," major global stock indices will see sentiment repair, and the duration of this phased repair window for A-shares may last until about one week after the National Day holiday; but the institution also warned that the U.S. "inflation-Treasuries-rates" dilemma is a medium- to long-term slow variable and will not be completely resolved by a single rate hike. China Securities Co.,Ltd.'s Xia Fanjie regarded the late-October FOMC meeting as a key observation point. Before that, whether the repair rally can continue depends mainly on whether the decline in overseas interest rates and oil prices can persist. Shenwan Hongyuan Group was relatively cautious, judging that the current move is only a small-scale rebound, and that the market will remain in a phase of oscillation and consolidation for the rest of the year. For the technology sector to embark on a major main upward wave, a heavyweight AI industry catalyst is still needed to forge new market consensus. This article is reprinted from "Cailian Press," edited by GMTEight: Liu Jiayin.