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"People experience sorrow and joy, partings and reunions; the moon waxes and wanes." On September 28, the first trading day after the Mid-Autumn Festival holiday, the A-share market felt somewhat "chilly," with major stock indices continuing to retreat across the board. The ChiNext Index and the STAR 50 Index both fell by more than 4%, and over 4,500 individual stocks in the entire market closed in the red.

Two years ago on September 24, A-shares surged on heavy volume after a package of policy measures landed, giving rise to the name "924 Rally." Two years later on September 24, the market clearly failed to replicate that day's script—there was no high open and high walk on expanded volume. Instead, it was a trading day of low open, slow decline, and shrinking volume.

Indices Continue to Retreat, Pre-Holiday Effect Is the Main Cause of the Correction

On September 28, the first trading day after the Mid-Autumn Festival, A-share major indices continued to open lower collectively, with the ChiNext Index and STAR 50 Index both falling more than 4%, and over 4,500 individual stocks declining across the market. In terms of turnover, total trading volume for the full day was 1.72 trillion yuan, slightly higher than on September 24. On the last trading day before the holiday (September 24), total market turnover was 1.67 trillion yuan, shrinking by approximately 114.016 billion yuan compared with September 23 (see attached table). That day, 4,303 individual stocks also declined, with only 1,120 stocks rising.

This year, the Mid-Autumn Festival and National Day are connected. By taking just 3 days of leave in between, one can piece together a super-long 13-day holiday. What does a long holiday mean? It means 13 days of uncertainty. For example, overseas factors may change during the holiday, such as fluctuations in U.S. stocks, changes in geopolitical factors, and your stock account cannot be touched until October 8. So rational funds chose to leave first.

After the Mid-Autumn Festival and before National Day, A-shares still have 3 trading days. Working backward according to T+1 settlement rules, if you sell on September 24, the settlement date is postponed to September 28 due to the Mid-Autumn holiday closure, and the funds can still be withdrawn before National Day. The truly last opportunity to "sell and still take the money out" is to sell on September 29 and transfer out on September 30. However, because the Mid-Autumn Festival and National Day are almost back-to-back, many funds have already mentally started their holiday in advance. Combined with quarter-end institutional assessments and quarter-end fund repatriation, selling pressure naturally concentrated and released in this time window.

In addition, on local time September 23, the U.S. 10-year Treasury yield surged about 14 basis points in a single day, closing at 5.113%, the highest since 2007. Earlier in intraday trading, it even touched 5.133%, and the 5-year yield briefly broke above 5%. The 30-year U.S. Treasury yield also stood above 5.4%. At the same time, market bets on the Federal Reserve continuing to raise rates in October heated up sharply. The interest rate swap market has already priced in three rate hikes over the next year, and the probability of a October hike rose to about 70%. Goldman Sachs expects the Federal Reserve may complete its final rate hike of the year at the October 27 policy meeting.

The logic is straightforward: when the risk-free rate moves higher, the pricing anchor for all high-valuation assets must be adjusted downward. Growth stocks, technology stocks, and innovative drug companies—sectors whose valuations are supported by discounting far-future cash flows—are most sensitive to interest rates and therefore hit hardest. The consequences already occurred in the U.S. stock market on September 23: the Nasdaq fell 1.13%, the S&P 500 fell 0.75%, the Dow fell 0.68%, and the Philadelphia Semiconductor Index fell 1.23%. Among Chinese concept stocks, the Wind China Concept Technology Leaders Index plunged 3.21%, and the Nasdaq Golden Dragon China Index fell 1.43%. Today's A-share technology sector is also "paying the bill" for overnight U.S. Treasuries.

But the supporting hand has always been there. According to public information from the central bank, on September 24 it conducted 800 billion yuan of 1-year MLF operations, adding 200 billion yuan in volume for the month, and also pre-announced that from September 28 to October 8 it would conduct overnight reverse repo operations of no more than 1 trillion yuan per day. Cross-holiday liquidity was carefully nurtured. The open market today conducted 51.5 billion yuan of 7-day reverse repos at an operation rate of 1.40%. After offsetting 162 billion yuan of maturities, there was a single-day net withdrawal of 110.5 billion yuan, which is a technical withdrawal rather than a policy shift.

Calendar Effect Is Likely Friendly—How Will the Post-Holiday Market "Perform"?

First, here is a piece of data that may give those holding stocks through the holiday some peace of mind: over the past ten years, the Shanghai Composite Index has had about a 70% probability of rising on the first day after National Day, and about a 60% probability of rising in the 5 days after the holiday. Institutions have offered the view: "Don't expect too much before the holiday; wait for catalysts after the holiday."

China Galaxy stated that the cross-long-holiday risk premium combined with quarter-end institutional assessment constraints may keep the market in a pattern of oscillation and rotation. Among the external factors that previously disturbed the market, the impact of overseas interest rates has weakened marginally, while geopolitical tail risks and energy inflation effects are still recurring. The key factors affecting subsequent market performance are gradually shifting from partial digestion of peripheral risks to whether the above positive factors can form a relay.

Shenwan Hongyuan Securities believes the next offensive rally may appear in October. The institution stated that after the window period in late September for stabilizing capital market expectations passes, the pattern of technology stocks oscillating and correcting may continue. At this stage, the technology sector does not yet have the conditions to restart a major upward rally, and it is necessary to patiently wait for major catalysts in the AI industry. In the remaining time this year, the best offensive opportunity may appear during the October third-quarter earnings disclosure period. On the premise that performance has largely digested valuations, core technology leaders may strengthen, and technology themes are expected to become active again.

CITIC Securities also stated that from the perspective of short-term sentiment and the chip cycle, combined with news catalysts from third-quarter earnings, the October market has the soil for active funds to position in new technologies and new themes. Investors are advised to actively seize the final long opportunity window of the year. Extending the time horizon to the entire fourth quarter, institutions' tone is clearly more positive. In intensively released autumn strategies, multiple brokerages believe that with the accumulation of positive factor expectations, third-quarter earnings catalysts, and marginal digestion of external risks, the year-end "sentiment repair" and "final offensive window" are still worth anticipating. The systemic slow bull pattern remains unchanged, and A-shares are expected to gradually emerge from a repair rally in the fourth quarter.

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