dexinwin China's National Day holiday is coming to an end, and the A-share market is preparing to reopen on October 8. The return to trading will also mark the official beginning of the fourth-quarter market.
For investors, the biggest question is not simply whether stocks will rise or fall after the holiday. The more important issue is how the domestic market will absorb changes in global markets, economic expectations, corporate earnings and investor sentiment accumulated during the trading break.
Before the holiday, China's A-share market showed clear divergence. Technology and growth-oriented sectors came under pressure, while some defensive sectors such as healthcare performed relatively better. On September 28, the market experienced a particularly sharp decline, with the Shanghai Composite Index approaching the 3,800-point area and growth benchmarks suffering heavier losses.
This makes the first trading session after the holiday particularly important.
Global markets will be the first major reference point.
While mainland Chinese stocks were closed during the National Day holiday, overseas markets continued trading.
U.S. employment data released during the holiday period came in significantly weaker than expected. Nonfarm payrolls increased by only 29,000 in September, compared with expectations for roughly 90,000, while the unemployment rate rose to 4.2%. The softer labor-market data reduced expectations for aggressive monetary tightening and provided some support to U.S. technology stocks.
For Chinese equities, this could create a potential "catch-up" effect when trading resumes.
If global risk assets remain relatively stable before China's reopening, some A-share sectors that were previously pressured by sentiment could experience a rebound. However, a sudden deterioration in overseas markets could lead Chinese investors to price those risks immediately after the holiday.
Corporate earnings will be another major focus.
China's third-quarter earnings season is beginning, and a significant number of companies are expected to release results in October. According to market data, 134 companies are scheduled to disclose third-quarter results between October 8 and October 21, covering sectors including electronics, chemicals, pharmaceuticals and nonferrous metals.
This means the market may gradually shift from trading policy expectations to evaluating actual corporate earnings.
Technology stocks that have experienced significant gains could face additional pressure if earnings fail to justify high valuations. On the other hand, companies showing stronger orders, improving profitability or sustained industry demand could receive fresh investor attention.
In other words, the market may increasingly move from"trading expectations" to "trading earnings."
Policy support will remain another important factor.
Chinese authorities introduced additional policy measures toward the end of September, while financial regulators also announced measures aimed at supporting economic activity and market confidence. Investors therefore continue to expect policy support to play an important role during the fourth quarter.
However, policy announcements alone may not be sufficient to generate a sustained market rally.
Investors will need to see whether policy measures translate into stronger economic activity, improved corporate earnings and healthier market liquidity.
The first two sessions may reveal the market's direction, but not necessarily its longer-term trend.
Because the A-share market will have only two trading sessions this week after the holiday, October 8 and October 9 could see relatively intense positioning and short-term sentiment trading.
Stocks and sectors that suffered heavy selling pressure before the holiday could rebound quickly if global markets remain stable and domestic funds return. Meanwhile, highly valued sectors and crowded themes could face profit-taking even if the broader market opens higher.
Historical data suggest that A-shares have often performed relatively well after the National Day holiday, but historical probabilities cannot determine the direction of the current market.
Instead of trying to predict whether October 8 will deliver a strong opening or a weak one, investors may be better served by watching three indicators:trading volume, the ability of major indexes to recover key levels, and whether market leaders can maintain their momentum.
A rising index accompanied by significantly higher turnover would suggest that risk appetite is returning. If the index rises while trading volume remains weak, however, the move could represent little more than a technical rebound.
For individual investors, avoiding emotional chasing may be particularly important after the holiday.
Several high-valuation sectors have already experienced significant volatility, while the third-quarter earnings season is beginning to provide new fundamental catalysts. Rather than making a large bet on the first day's market direction, investors may focus more closely on companies with improving fundamentals, reasonable valuations and sustained capital-market interest.
Looking across the fourth quarter, China's A-share market remains influenced by a combination of policy expectations, economic recovery, corporate earnings and global liquidity.
The market is unlikely to move in a straight line. Instead, investors should expect continued index volatility, sector rotation and structural opportunities.
The first trading session on October 8 will certainly attract attention, but the real direction of the fourth quarter will depend on whether trading activity can remain healthy, whether policy measures translate into economic improvement and whether corporate earnings ultimately meet investor expectations.
For A-share investors, the end of the National Day holiday does not provide an immediate answer.
It marks the beginning of another round of market competition.
In the short term, sentiment matters. In the medium term, policy matters. In the end, earnings still matter most.
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