Tianfeng Securities: This year's "Spring Festival frenzy" market may continue longer

Tianfeng Securities Research Report states that this year, the reinforced patterns may include: first, the foundation for the “spring awakening” market trend is more solid. Whether it is the policy expectations at the start of the “14th Five-Year Plan,” the outlook for global liquidity easing, or the trend of residents reallocating funds into equity assets, these factors may strengthen the market’s post-holiday upward pattern, making this year’s “Spring Festival excitement” trend potentially more sustained. Second, the leading and strengthening of consumption and travel trends. Due to the “historically super-long nine-day Spring Festival holiday,” consumer demand has been released significantly earlier than in previous years, and the scale of travel and consumption is expected to break new records, leading to more stable market expectations for an “economic recovery.” Third, the interval fluctuation in the bond market may be reinforced. In January, the central bank announced a 0.25 percentage point structural interest rate cut, indicating a reduced need for total rate cuts in the short term. If liquidity easing during the holiday period drives bond market recovery, then after the holiday, with accelerated local government bond issuance and warming policy expectations, the probability of interest rate adjustments may increase.

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Tianfeng · Fixed Income | Stable Bonds Before the Holiday, Warm Stocks After? — The “Spring Festival Effect” in History

We believe that the patterns that may be reinforced this year include: first, the more solid foundation for the “spring awakening” market trend. Second, the leading and strengthening of consumption and travel trends. Third, the interval fluctuation in the bond market may be reinforced. Patterns that may be broken or weakened this year include: first, the “bond strength, stock weakness” risk-avoidance mode before the holiday. Second, the weakening of stock style switching.

Looking ahead from this point, how will the stock and bond markets evolve around the Spring Festival? Which seasonal patterns might be reinforced or broken? This article focuses on these questions.

Since the beginning of the year: Reassessment of stock and bond values underway

Since the start of the year, the Shanghai Composite Index has risen for 16 consecutive days and has re-closed above 4100 points for the first time in 10 years. The combined trading volume of the Shanghai, Shenzhen, and Beijing markets has expanded to over 30 trillion yuan, followed by a high-level correction in the equity market. There is a “hot and cold” phenomenon at the index level, with small and mid-cap stocks performing strongly, technology and growth leading, and large-cap blue chips showing smaller gains.

In the bond market, yields on interest rate bonds first rose and then fell in January, showing an overall “inverted V” pattern. Long-term yields performed relatively well, while ultra-long bonds were weaker; with coupon advantages, the credit market remained resilient, outperforming interest rates, and credit spreads generally narrowed.

Ten-year Review: Stock and bond trends before and after the Spring Festival

(1) How have stocks historically rotated around the Spring Festival?

Typically, in the 30 days before and after the Spring Festival, the A-share market shifts from consolidation to an upward trend. The market also shows a clear style switch from large-cap, dividend-oriented stocks before the holiday to small-cap, growth-oriented stocks after. Data from 2015-2025 shows that the proportion of years with style switching in this period reaches 81.82%. Moreover, in the 30 days after the festival, the market usually experiences a “spring awakening” rally, with higher probabilities of gains and larger average gains compared to the 30 days before the holiday, and increased market activity.

Additionally, if the Spring Festival falls later in February, two factors may come into play: first, due to the offset of the holiday, working days in January may increase, potentially improving January’s economic and financial data year-on-year and boosting market sentiment; second, the policy expectation window between the holiday and the Two Sessions may be compressed, prompting some funds to pre-position, which could accelerate the “spring awakening” rally. In late Spring Festival years like 2015, 2018, 2021, and 2024, the probability of the CSI 300 index rising before the holiday is 75%, higher than the average of 63.64%.

(2) How has the bond market historically behaved around the Spring Festival?

The core logic of bond trading before and after the festival may undergo phase shifts. Pre-holiday trading is characterized by “liquidity and certainty,” with bonds benefiting from easing conditions and allocation needs, typically performing more steadily. Post-holiday trading focuses on “economic growth and risk appetite,” as economic activity normalizes and key meetings approach, leading to market debates on recovery strength and policy direction, often weakening bond sentiment and making rates harder to fall.

If the Spring Festival is later in February, two factors are notable: first, the demand for cash withdrawals by residents in February is offset by credit issuance and tax payments in January, easing liquidity pressure; second, a late Spring Festival may lead to a more gradual release of January credit reserves, prompting banks and other institutions to pre-allocate bonds earlier and more actively, providing more time for trading to speculate on easing conditions before the holiday. In late Spring Festival years like 2015, 2018, 2021, and 2024, the probability of government bond yields declining in the 10 days before the holiday is 75%, higher than the average of 63.64%.

Market Outlook: Will the “Spring Festival Effect” reappear?

We believe that patterns that may be reinforced this year include: first, the more solid foundation for the “spring awakening” trend. Whether it is the policy expectations at the start of the “14th Five-Year Plan,” the outlook for global liquidity easing, or the trend of residents reallocating funds into equity assets, these factors may strengthen the market’s post-holiday rally, making this year’s “Spring Festival excitement” trend potentially more sustained. Second, the leading and strengthening of consumption and travel trends. Due to the “historically super-long nine-day Spring Festival holiday,” consumer demand has been released significantly earlier than in previous years, and the scale of travel and consumption is expected to break new records, leading to more stable market expectations for an “economic recovery.” Third, the interval fluctuation in the bond market may be reinforced. In January, the central bank announced a 0.25 percentage point structural interest rate cut, indicating a reduced need for total rate cuts in the short term. If liquidity easing during the holiday period drives bond market recovery, then after the holiday, with accelerated local government bond issuance and warming policy expectations, the probability of interest rate adjustments may increase.

Patterns that may be broken or weakened this year include: first, the “bond strength, stock weakness” risk-avoidance mode before the holiday. Historically, due to liquidity easing and risk aversion, a “bond strong, stock weak” pattern often appears before the holiday. But this year, with strong expectations for the “spring awakening” and an earlier timing, the market may not be solely risk-averse, but rather a scenario where stocks and bonds both have support and compete more intensely. Second, the weakening of stock style switching. Historically, small-cap growth stocks tend to outperform after the holiday, and this pattern may still appear, but its strength may be limited by two factors: one, in the context of clear industry cycle prosperity, large-cap growth may also perform strongly; two, the long-term allocation logic of “high-dividend” assets remains solid, and the post-holiday style may be a “growth and dividend dance” rather than a simple style switch.

Risk Warning: Policy uncertainties; unexpected changes in fundamentals; overseas geopolitical risks.

(Source: People’s Financial News)