As the Spring Festival approaches, the market has entered a phase of adjustment. This represents a temporary cooling-off period following the extended rally of "17 consecutive positive sessions" during the cross-year period. It is important to recognize that this short-term pullback does not signal the end of the current slow and prolonged bull market trend.
The primary reason for this recent correction is the substantial gains seen across multiple sectors earlier, which attracted a surge of investor participation. Daily trading volume on the two major exchanges once approached 4 trillion yuan, while the margin trading balance also exceeded 2.6 trillion yuan, reaching a historic high.
The short-term overheating of the market increased profit-taking pressure and also served as a reminder of potential risks for investors. Therefore, this adjustment phase is better viewed as a mechanism to make the market advance "slower and more sustainable," rather than "too fast and too rapid," and should be interpreted correctly.
During this adjustment, the decline in major indices has been modest. However, technology stocks, which experienced significant gains previously, saw more pronounced pullbacks, indicating a relatively thorough correction overall.
Sector rotation has begun to emerge during this period. Benefiting from the peak consumption season around the Spring Festival, the branded baijiu sector once staged a counter-trend rally, demonstrating that rotational characteristics within the slow bull market are strengthening.
This aligns with a previous assessment: the sequence of rotation in this market cycle may follow a pattern of "new leaders first, followed by intermediate leaders, and then traditional leaders." Here, "new leaders" primarily refer to technology stocks; "intermediate leaders" mainly include the new energy, defense, and non-ferrous metals sectors; while "traditional leaders" often point to established consumer blue-chips and other conventional sectors.
Last year, technology stocks significantly outperformed. Investors who were not positioned in the technology sector may have seen limited overall returns; those primarily invested in "traditional leaders" likely had a relatively weaker experience. Investors dissatisfied with last year's results need not be anxious. With the arrival of the Year of the Horse, sector rotation is expected to become more comprehensive, potentially offering opportunities for intermediate and traditional leaders to perform.
Although the sustainability of the recent rise in the branded baijiu sector remains to be seen, signs of sector rotation are already apparent. Enhanced rotation is conducive to a more stable and enduring market advance.
In the "Ten Predictions for 2026" released at the end of last year, it was suggested that U.S. stocks face increased risks of a peak and decline, while A-shares and Hong Kong stocks were expected to continue their slow bull market trajectory. This view appears to be receiving initial confirmation. Market concerns arose regarding potential liquidity tightening through balance sheet reduction by President Trump's newly nominated Fed Chair, leading to a significant drop in U.S. stocks. A more fundamental reason is the substantial prior gains in U.S. stocks, with some technology stocks having risen for years and trading at elevated levels.
AI technology itself is still in the early stages of industrial development, with vast potential for future commercial application. However, the objective risk of a阶段性 bubble exists after such significant stock price increases. In a recent annual special program recording, discussions touched upon the profound impact of the AI technological revolution on work and lifestyle. While it is acknowledged that AI technology could nurture a number of great companies, a pullback following excessive gains is reasonable.
Previously, Wall Street investor Jim Rogers expressed two main concerns: first, rising global debt risks, with total global debt exceeding $300 trillion, approximately 2-3 times global GDP; second, the potential for a market decline triggered by a bursting AI bubble in U.S. stocks. In a recent discussion, Mr. Rogers mentioned he had liquidated his U.S. stock holdings and currently favors A-shares and Hong Kong stocks. The likely outcome may be a "moderate scenario": U.S. stocks this year are more probable to enter an adjustment phase following high valuations, rather than continuing a sharp rally or experiencing a crash-like decline.
A correction in U.S. stocks may temporarily affect A-shares and Hong Kong stocks, particularly transmitting negative sentiment to technology shares, but the medium-term impact is expected to be limited. This is because the market positions differ: U.S. stock valuations are high, whereas A-share and Hong Kong stock valuations remain below their historical averages. Consequently, there is still room for valuation expansion in A-shares and Hong Kong stocks during the Year of the Horse.
The current market still exhibits structural divergence: the technology and innovation sectors have seen large gains, while traditional sectors remain relatively sluggish. Throughout 2026, approximately 50 trillion yuan in time deposits are set to mature. These deposits previously carried annualized interest rates around 3%, but renewal rates may only offer slightly over 1%. Some of this capital is likely to shift from savings into higher-yielding assets:一部分 may be allocated to fixed-income products like bond funds, while another portion may flow into equity funds to participate in the slow bull market. Household savings could accelerate their shift into the capital market in 2026, providing incremental funds for the market advance.
Regarding trading volume, recent market activity has decreased from its peak. Daily trading volume previously neared 4 trillion yuan but has since moderated to above 2 trillion yuan following the correction. However, compared to the frequently seen volumes of less than 1 trillion yuan in the past, current levels remain relatively high, indicating that trading activity is still lively and the赚钱效应 persists， albeit weaker than during the "17 consecutive positive sessions" phase.
Therefore, the recent adjustment appears more as a window of opportunity to position in quality stocks or funds, rather than a time for panic selling. The decision of "holding stocks or cash over the holiday" primarily depends on the portfolio's composition: if holding high-quality stocks or funds that haven't risen significantly before the holiday, considering holding them might be appropriate; if positions have substantial paper profits from large pre-holiday gains, considering profit-taking and holding cash could be an option.
As the Year of the Horse approaches, best wishes are extended to all investors for immediate prosperity, swift success, good health, and successful investments in the new year.