Reduced-volume decline, how will the A-shares perform after the holiday?

April 3, A-shares fell on shrinking volume, with trading value dropping below 1.7 trillion yuan, as 4,746 individual stocks closed down. In terms of sectors, only communications and electronics ended the day in the red; all other sectors closed lower, with power equipment leading the declines.

Interviewees noted that funds are mainly concerned about the escalation of overseas geopolitical conflicts during the Qingming holiday, and that rising international oil prices may push up global inflation, with risk-off sentiment taking the lead. Therefore, blindly bottom-fishing or liquidating positions is not advisable. It is recommended to wait until after the holiday when trading volume and the external environment become clearer before making decisions. After the holiday, pay attention to indicators such as trading volume. If a period of ultra-low volume stabilizes, there may be a weak rebound; if key support is broken, it could lead to further downside.

Trading volume shrinks to 1.67 trillion yuan

In the last two trading days before the Qingming holiday, A-shares kept sliding. Today, driven by risk-off sentiment over the holiday, the market fell on thinner volume, and the overall performance was sluggish throughout the day. For indices, the Shanghai Composite fell 1% to 3,880.1 points, the ChiNext index fell 0.73% to 3,149.6 points, and the Shenzhen Component fell 0.99%. The declines in the CSI 300 and SSE 50 were both under 1%; the STAR Market 50 was marginally down, while the BSE 50 fell by more than 2%.

Risk-off sentiment was thick, and trading activity clearly cooled. Daily trading value shrank by 188.9 billion yuan from the previous trading day, falling to 1.67 trillion yuan, the lowest level since 2026. The last time trading value fell below 1.7 trillion yuan was last year in October and December.

The “money-losing effect” was evident: a total of 4,746 stocks ended the day down, including 41 stocks that hit the daily limit down. Only 716 stocks finished up, with 38 stocks hitting the daily limit up. Today, three CPO concept leader stocks—“Yi Zhongtian” (Mellanox? actually listed as 中际旭创, 新易盛, 天孚通信)—had daily trading values all above 10 billion yuan, and all three closed higher. For power equipment stocks, CATL and Sungrow both fell by more than 3%.

On the trading board, optical communication modules and optoelectronic devices strengthened. Electronic equipment manufacturing and electronic components inched up, but power equipment, Qilin batteries, natural gas, and micro-cap stocks all dropped sharply.

Among 31 Shenwan primary industries, the communications sector opened higher and kept rising. Deklo “20cm” hit the daily limit up, while Huichuan Communications, Shijia Technology, CN Tsing, and Tongyu Communications all hit limit-ups. The electronics sector also turned slightly red: Sinchuan Special Gas and Yitian Shares “20cm” hit the daily limit up; Tengjing Technology, Meidekai, Guangpu Shares, and Jiangfeng Electronics all rose by more than 10%. Yeshi Optoelectronics and Fucjing Technology also hit limit-ups.

There were 13 sectors with declines of more than 2%. Among them, agriculture, forestry and animal husbandry and power equipment led the losses; medical and biologics—recently performing well—also pulled back.

“Today’s sector performance diverged, behind which is structural reshuffling by capital.” Ge Shang Fund Researcher Bi Mengjuan told the reporter of the International Finance News: This shows that differences over high-valuation growth stocks are increasing. Judging from sector performance, some funds are still actively looking for high-growth, high-certainty tracks, and sentiment in the technology growth area is relatively active. By contrast, the sluggishness in power equipment, agriculture, forestry and animal husbandry, and coal sectors reflects pressure on both traditional industries and the high-valuation growth track. Overall, capital is shifting from high-level thematic and cyclical sectors toward hard-core technology areas with lower valuations and higher certainty. Most other sectors fell broadly; at root, this is a defensive withdrawal driven by risk-off sentiment, not a substantive deterioration in fundamentals.

Risk-off sentiment before the holiday is strong

“Today’s A-shares fell on shrinking volume across the board, with the core logic being risk-off sentiment dominated before the holiday.” Tong Deyi, chairman of Longying Fuze Asset Management, analyzed for the reporter of the International Finance News that the market saw declines in both price and volume, with clearly cautious and subdued sentiment. Trading volume shrank to below 1.7 trillion yuan, reflecting capital actively reducing positions and being unwilling to hold through the holiday. There are three specific reasons behind the selloff: first, with Hong Kong markets closed, northbound funds were absent; second, holiday cash-withdrawal funds exited; third, investors were concerned about uncertainties in the Middle East and other geopolitical situations during the holiday, so they chose to wait and watch. Sectors showed extreme divergence, with “defensive resilience to declines” and “growth-cycle selling” characteristics clearly visible.

Zhang Xiaodong, fund manager at Gecko Capital, also explained that with the three-day Qingming market closure, funds worried that overseas geopolitical conflicts would intensify during the holiday and that higher international oil prices would raise global inflation, so risk-off sentiment took the lead. Combined with concerns that listed companies’ earnings would fall short of expectations, indices fell on shrinking volume throughout the day. Currently, the market’s risk appetite is lower; investors are more cautious in style, and trading sentiment is still in the repair phase.

Wang Zheng, general manager of Shangyi Fund, analyzed that today’s A-shares released complex signals. On one hand, trading volume continued to shrink and pre-holiday selling pressure was concentrated, consistent with the historical pattern of “low volume preceding the stabilization of price” and the “post-holiday expansion and rebound.” In the short term, panic sentiment has been somewhat digested. On the other hand, more than 4,700 stocks fell broadly on shrinking volume, indicating that funds outside the market are unwilling to take the bait. The market lacks a clear main thread, and combined with holiday geopolitical uncertainty, the adjustment cannot be said to have found a bottom.

Cheng Tianxu, senior research fellow at Qingdao Anzhi Investment, also told reporters that the pre-holiday A-share risk-off plus shrinking-volume adjustment was mainly influenced by increased overseas geopolitical volatility and the pullback in market risk appetite, along with the lack of new positive catalysts after the prior rebound and no clear leading main theme. With heavy risk-off watching, trading value fell back to below 1.7 trillion yuan, showing clear characteristics of limited-quantity games.

Bi Mengjuan said that before the holiday, demand dominated for holding cash over holding securities, and liquidity is temporarily tightening. During the Qingming mini-holiday, the market faces many uncertainties, including fluctuations in overseas markets and potential changes in policy outlook, so investors generally adopt a cautious strategy and proactively reduce large transactions to mitigate holiday risks. Current trading sentiment has dropped to a stage-low level and shows overall dullness with structural divergence. Investor psychology has shifted from the earlier active optimism to cautious waiting. However, the market has not seen extreme irrational liquidation, and the decline in the index is relatively controllable.

After the holiday, it may first dip low and then churn

What will A-shares do after the holiday? And what market factors need to be watched?

Tong Deyi expects that after the holiday, the A-share market will first probe the bottom and then trade sideways. The first trading day after the holiday (April 7) should focus on two points: first, the effectiveness of support near 3,870 points; second, whether trading volume can rebound and whether northbound funds return. If ultra-low volume stabilizes, there could be a weak rebound; if support breaks, further downside probing is possible. In addition, three major factors also need attention: first, the external situation—developments in the Middle East (April 7 is a key node) and how they affect global risk appetite; second, internal liquidity—central bank open-market operations and changes in year-end/period-end funding conditions; third, fundamental verification—April enters the dense earnings season for quarterly reports, and the quality of earnings will become a new main line for the market.

Cheng Tianxu expects that after the holiday, A-shares will most likely continue with a pattern of sideways consolidation. Once external uncertainties ease and holiday-linked funds return, the market may have a chance to return to a sideways-to-upward structure. Domestic fundamentals and policy support are relatively strong, and geopolitical shocks mainly affect sentiment in the short term. Investors should focus on overseas developments and signals for China’s economy and policies. For positioning, it should mainly be steady; the focus can be on directions related to energy and inflation, while also tracking oversold rebound opportunities in strong sectors such as communications and electronics, and growth directions such as power equipment.

“Today’s shrinking-volume decline on the last trading day before the holiday was mixed with risk-off noise and real selling pressure. Blind bottom-fishing or liquidation is not appropriate. It is recommended to wait until after the holiday when volume and the external environment are clear before making a judgment.” Wang Zheng said directly. As for post-holiday performance in A-shares, if volume increases moderately and the index stabilizes, the current level may become a phase bottom. If volume continues to shrink or a “black swan” event occurs during the holiday, the adjustment cycle may be extended.

Based on pre-holiday market characteristics, the macro environment, and core influencing factors, Bi Mengjuan expects that in the short term the market will show a pattern of choppy repair. In the medium term, the market may revert to fundamentals, and structural opportunities will become the mainstream. There is no need to be overly pessimistic, but potential risks still need to be watched. The key variables for post-holiday market走势 mainly concentrate on five areas: macroeconomic conditions, policy developments, earnings disclosures, the external environment, and fund flows.

Xia Fengguang, fund manager at Rongzhi Investment, said that before the Qingming mini-holiday, risk-off sentiment dominated, and many investors chose to stay on the sidelines. As Iran’s situation gradually evolves, the probability of the war getting out of control is already basically very small, but deep-rooted contradictions are difficult to resolve; prolonged standoff is the expectation of most people. Without clear entry signals, active long positioning sentiment is not high, and caution is the market’s mainstream. Based on current estimates, blue-chip stocks represented by the CSI 300’s ROE may see double-digit growth. The market’s adjustment is when patient capital chooses the timing to enter. Even if there is a sharp selloff in the short term due to external shocks, it could still be a “golden pit.”

How to position your holdings

After the holiday, the market will still face disturbances from uncertainty factors, and it is also during the earnings disclosure period. What risks do investors need to pay attention to in managing holdings, and how should they allocate positions across sectors?

“It’s best to control position size, with defense as the priority.” Tong Deyi advised low allocation to avoid high-level thematic stocks. In terms of structural allocation, investors can pay attention to risk-off sectors such as oil and gas, energy (geopolitical premium), healthcare (defensive attributes), and high-dividend banks. As for timing, it is recommended to wait for a right-side signal after the holiday when the market regains volume and stabilizes, and then gradually build positions in high-quality growth stocks with expected first-quarter earnings growth and reasonable valuations.

“Investors currently need to watch risks such as big gains in the earlier period, valuations that are on the high side, and divergence in first-quarter earnings expectations, and be alert that some targets may lead to capital withdrawals if earnings miss expectations.” Zhang Xiaodong reminded investors that they can reduce positions in high-level thematic stocks and increase allocation to low-valuation, quality-cycle-exposed and high-dividend sectors to reduce portfolio volatility. They can also use a barbell strategy: technology (AI, semiconductors) as the offensive main line (positions may be reduced as appropriate), while new energy, non-ferrous metals, and energy serve as defense. At the same time, they should focus on high-dividend assets (such as power and insurance) to hedge volatility.

For holdings, Bi Mengjuan suggested seizing structural opportunities while controlling risks, and avoiding chasing rallies or selling in panic. Sector positioning should focus on the main lines and avoid high-risk areas: first, the hard-core technology main line with strong earnings certainty; second, the dividend defense main line that can avoid market volatility risks and provide stable returns; third, the turnaround-from-difficulty main line that captures valuation-repair opportunities.

Reporter: Zhu Denghua