Snake Year’s Final Week: What’s Next for China’s A-Share Market? Here’s the Latest Analysis

In the trading week that just concluded (February 2–6), A-shares opened February with a clear headwind on Monday. What followed over the next four sessions, however, unfolded in a far more nuanced and delicate manner.

In simple terms:

On Monday and Tuesday, the market staged a strong rebound after an episode of extreme panic.

On Wednesday and Thursday, that recovery failed to gain further traction, giving way instead to choppy consolidation and a gradual pullback.

By Friday morning, the market tested the lows again and rebounded, only to retreat once more in the afternoon session.

Against this backdrop, the overall market setup appears finely balanced—seemingly capable of moving either higher or lower. As a result, both optimists and pessimists can find reasonable arguments to support their respective views.

Those with a bullish outlook may argue that the recent market turbulence is largely seasonal. With the Lunar New Year approaching, trading activity naturally thins as funds step aside, leading to shrinking volumes. Once the holiday passes—or even in the final days before it—the broader market could gradually regain upward momentum.

More cautious observers, however, point to persistent pressure from large-scale capital outflows from broad-based ETFs over recent weeks. These flows have not only capped index gains but also dampened short-term trading enthusiasm. Combined with sharp volatility in commodities such as precious metals, some speculative capital has once again found itself trapped, further constraining near-term market performance.

So where do you stand?

It is undeniable that short-term trading conditions have been challenging. Data from a live trading competition shows that since late January, participants have only managed to post broadly positive returns on five trading days.

Yet when shifting the lens to a medium- and long-term perspective—by examining monthly candlestick charts—the broader trend remains intact.

Whether it is the Shanghai Composite, the Wind All-A Index, the average A-share price, the CSI 1000 index often regarded as best reflecting real profit-making effects, or even the CSI 300, which has faced sustained selling pressure from large funds, a common pattern emerges.

Since bottoming out last April, the bodies of these monthly candles have consistently moved higher along the MA5 moving average. Even when temporary intramonth dips occurred, the overall structure has not been broken.

As highlighted in our Friday commentary, the market may now be entering a “Snake Tail” phase—a period of positioning and tactical maneuvering. As investors begin to speculate on post-holiday themes, early accumulation behavior is likely to surface in price action.

From this vantage point, market participants still have solid grounds for cautious optimism. The key lies less in predicting direction and more in managing position size and timing.

Avoiding aggressive chasing at highs and focusing on disciplined buying on pullbacks may not dramatically boost returns in the current environment, but it can meaningfully reduce downside risk.

A research note from Kaiyuan Securities echoes this view, noting that A-shares, U.S. equities, and global commodity markets have all experienced bouts of volatility recently. However, the broader bull market remains intact. Investors, the report argues, should maintain confidence in the bull cycle, temper return expectations, and value the “golden pits” created by liquidity-driven sell-offs.

“Some investors have recently begun to worry that the bull market has ended,” the report states. “We firmly believe that the underlying drivers of the bull market remain unchanged. The MA60 of the Shanghai Composite has risen to around 4,000 points, continuously lifting the market’s lower bound. Drawing lessons from the period between late January and the Lunar New Year in 2015—when the index pulled back toward MA60 before recovering in small steps—we remain optimistic about the downside boundary of this round of consolidation.”

Soochow Securities also expects February market performance to improve relative to late January.

From a sector-rotation perspective, high-flying segments such as nonferrous metals have come under pressure due to short-term overbought conditions and adjustments in rate-cut expectations. Profit-taking has loosened crowded trades and weakened upside momentum, suggesting that these sectors may enter a phase of consolidation in February.

As liquidity gradually improves, capital is likely to rotate toward sectors with relatively weaker or second-tier fundamentals, helping them build bases and close valuation gaps. Certain technology and cyclical sectors within A-shares have lagged previously. With the broader market trend stabilizing and nonferrous metals transitioning from trend-driven gains to range-bound adjustment, these previously pressured areas may present increasingly attractive allocation opportunities.

There is also a small historical bonus worth noting. Over the past decade, the Shanghai Composite has risen in roughly 70% of the final five trading days before the Lunar New Year, with an average gain of nearly 0.2%. Strong pre-holiday performances were seen in 2021, 2023, and 2024, while weaker outcomes occurred in 2018, 2020, and 2022.

That said, due to the holiday break, February will feature only nine actual trading days for A-shares—five next week (February 9–13) and four after the holiday (February 24–27).

Viewed in this light, treating February as a transitional phase of consolidation and stabilization, while reserving the main opportunities for March and beyond, is a perfectly reasonable strategy.

Looking ahead, several key developments over the weekend deserve close attention.

First, China successfully launched a reusable experimental spacecraft. According to CCTV News, on February 7, a Long March-2F rocket lifted off from the Jiuquan Satellite Launch Center, sending the spacecraft into orbit. The mission will conduct technical verification for reusable spacecraft, providing support for the peaceful use of outer space.

Second, the central bank increased its gold reserves for the 15th consecutive month. Official data show that China’s gold reserves stood at 74.19 million ounces at the end of January 2026, up from 74.15 million ounces at the end of December 2025.

Third, U.S. equities staged a strong rebound. On Friday, all three major indices closed higher. The Dow Jones Industrial Average surged 2.47% to close above 50,000 for the first time, marking a new record and a weekly gain of 2.5%. The Nasdaq rose 2.18% on the day, though it still fell 1.84% for the week, while the S&P 500 gained 1.97%, ending the week down 0.1%.

The Nasdaq Golden Dragon China Index jumped 3.71%.

NVIDIA climbed nearly 8%, adding roughly $325 billion in market value. CEO Jensen Huang said demand for artificial intelligence remains “astonishingly high,” noting that Anthropic and OpenAI are already profitable and that large-scale AI capital expenditure is both reasonable and necessary.

In addition, Qwen announced that its Lunar New Year free-order campaign has far exceeded expectations, prompting an extension of the validity period for its free-order cards.

The National Health Commission also released a draft of the “Food Safety National Standard for Prepared Dishes” for public consultation.

Meanwhile, SDIC UBS Fund announced that it has established a dedicated task force to actively address investor concerns related to its Silver LOF fund.

Finally, looking ahead to the last trading week of the Snake Year, several major events are on the calendar.

On Monday, February 9, Montage Technology will be listed on the Hong Kong Stock Exchange at an issue price of HKD 106.89 per share.

On Tuesday, February 10, SMIC will release its fourth-quarter 2025 earnings after the market closes.

On Wednesday, February 11, the National Bureau of Statistics will publish January CPI and PPI data, with additional figures to be released on Friday and Saturday.

On Thursday, February 12, Amazon’s low-Earth-orbit satellite is scheduled to be launched by Arianespace.

And on Friday, February 13, the Cannes World Artificial Intelligence Festival will take place from February 12 to 14 local time.

Daily Economic News