Year of the Horse A-shares Celebrate a "Good Start": Cyclical "Old Leaders" Lead the Rally, Technology and Consumer Sectors Cool Down

The first trading day of the Year of the Horse in A-shares sees a broad rally, with most core indices rising between 1% and 2%. According to data since 2010, the probability of a “good start” in the short term after the Spring Festival holiday is relatively high.

However, during this year’s Spring Festival holiday, sectors that were hot in the Hong Kong stock market, such as AI large models, robotics, and consumer sectors with good holiday data, unexpectedly cooled off in A-shares today. Leading the charge were traditional assets like petrochemicals, building materials, basic chemicals, non-ferrous metals, coal, and steel.

Brokerages: Spring Market Still Continues

Today, the A-share market showed a broad increase, with most core indices rising between 1% and 2%. The Shanghai Composite rose 0.87%, closing at 4,117.41 points, regaining the 4,100 level. In contrast, the technology sector was relatively weaker, with the STAR Market 50 and STAR Market 100 indices falling 0.34% and 1.55%, respectively.

Since 2010, the average return of major broad-based A-share indices before and after the Spring Festival has been positive (Source: Pacific Securities research report screenshot).

Depon Securities recently released a report stating that today’s A-share market showed a “good start” trend. On one hand, overseas markets generally rose during the Spring Festival holiday; on the other hand, after a significant adjustment on the last trading day before the holiday, there was a need for recovery. Looking ahead, the spring market is expected to continue, with short-term sector rotation and oscillating upward trends. From the perspective of policy support and domestic and international industry development trends, sectors such as photovoltaics (space photovoltaics, HJT technology), commercial aerospace (satellite manufacturing, computing services), and non-ferrous metals (gold, silver, copper, aluminum) may still have new catalysts. It is recommended to maintain balanced allocations and buy on dips.

From the actual performance of A-shares since 2010, after the Spring Festival holiday, the market has a higher probability of short-term gains, especially in small-cap sectors represented by the CSI 2000 and micro-cap indices.

For example, according to Pacific Securities, since 2010, the average increase of the CSI 2000 and micro-cap indices in the 20 trading days after the holiday has exceeded 10%, outperforming the SSE 50 and CSI 300. Today, the CSI 2000 rose 1.25%, outperforming the Shanghai Composite; the SSE 50 index rose only 0.23%, failing to beat the broader index.

“Price Increases” Have Become a Core Theme in A-shares

At the close, among the top 10 sectors by gain, except for communications, almost all are “old leaders”: the Petrochemical Index surged 5.53%, and the building materials, basic chemicals, non-ferrous metals, and coal indices all gained over 3%.

Leading sectors on the first trading day of the Year of the Horse (Source: Choice Data screenshot)

In contrast, sectors that were active during the Spring Festival, such as AI large models, robotics, and consumer sectors with good holiday data, did not reflect this strength in today’s A-shares.

For example, the CSI Robotics Index opened up 2% but then declined, closing down 0.51%. Additionally, indices for food and beverages, retail, and media sectors also declined today.

Regarding the leadership of “old leaders,” a chief strategist at a brokerage analyzed that this was mainly due to improved PPI data, coupled with high valuations in the tech sector, leading to a valuation rotation process.

Recently, the National Bureau of Statistics released data on the Consumer Price Index (CPI) and Producer Price Index (PPI) for January 2026. The PPI decreased by 1.4% year-on-year in January, narrowing the decline by 0.5 percentage points, slightly better than the expected 1.45% decline, with a month-on-month increase of 0.4%, marking four consecutive months of increase.

CICC’s strategy team believes that the main reasons for the continued narrowing of the January PPI decline include: ongoing policies to “counter internal competition,” improved supply-demand balance in industries like photovoltaics and steel; export-driven demand boost in chemical sectors combined with cost support leading to price improvements; and geopolitical risks and supply constraints pushing up non-ferrous metal prices.

Since last year, resource sectors like non-ferrous metals have been considered “dark horses” in the A-share market. Even after a year of significant gains, the bull market in resource commodities has not stopped.

According to Industrial Securities’ strategy team, “price increases” have become the core theme of A-shares since the beginning of the year. Price hikes are no longer confined to specific sectors; many industries have assets that are increasing in value, and trading of these assets is rising. They analyzed the top 30 concept indices by gain since the start of the year, with 20 related to price increases. The scope of price-increasing assets is expanding from non-ferrous metals to oil and gas, chemicals, building materials, and technology.

Image source: Industrial Securities Strategy Team

Looking ahead 1-2 months, the market still holds expectations for “old leader” assets with cyclical properties. Industrial Securities’ strategy team believes that March and April each year provide a favorable window for price-increase trades. Historically, in March and April, China’s high-frequency economic activity indices and Citibank’s China economic surprise indices tend to rise seasonally. This is partly because macro policies accelerate after the Two Sessions, boosting market optimism about the economy; and as the peak spring construction season begins, positive data further validate this optimism. Therefore, March and April are typically the best times for the market to feel macroeconomic improvements and for optimistic expectations about cyclical sectors to ferment.

Daily Economic News