China’s Golden Week holiday will be a crucial period for stock traders looking for fresh market impetus after a brutal year pushed a key benchmark to near its lowest in two years. 

The CSI 300 Index has lost more than 14% this quarter, buffeted by the nation’s Covid restrictions and property woes, as well as a global selloff triggered by the Federal Reserve’s tightening. Spending during the seven-day holiday starting Oct. 1 will be scrutinized to gauge whether the economy is emerging from a trough, or remains in the doldrums.

The period, usually a peak season for travel and consumption, carries even more importance this year as it comes just two weeks before the twice-a-decade Party congress. Weaker spending during the holiday may disappoint traders and add to selling pressure, though it may also bring further economic stimulus to the leadership gathering.  

“On retail sales, the spending sentiment appears more subdued this year due to lingering concerns on the economy and Covid,” said Catherine Lim, senior analyst for Bloomberg Intelligence. “I’m not expecting domestic tourism and box office to record any significant year-over-year growth, if any.”  

Here are sectors that investors are watching to assess market momentum: 

Travel 

Chinese carriers are among the worst performers in the Bloomberg Asia Pacific Airlines Index this year amid tight border curbs.

Analysts are still expecting domestic holiday demand to give airline stocks a lift, though travel will still remain a fraction of pre-pandemic levels. 

The upcoming period will provide a catalyst for the airline sector and investors should consider “actively” buying related shares, according to Zhongtai Securities Co.  

“It’s highly certain that weak aviation demand will improve marginally” and “the sector has long-term investment value,” analyst Du Chong wrote in a note.  

Air China Ltd., China Eastern Airlines Corp., Spring Airlines Co., Shanghai International Airport Co., and Shenzhen Airport Co. are worth paying attention to, according to the report. Air China shares have gained almost 15% from an August low. 

Tourism 

Authorities have told citizens to minimize travel to other cities during the holiday to prevent the spread of Covid, boosting stocks linked to staycations, hotels around major cities, and travel agencies that specialize in short-distance tours. 

Tour operators for scenic spots and companies with vertical business chains along the industry, such as China CYTS Tours Holding Co., Jiangsu Tianmu Lake Tourism Co., and Songcheng Performance Development Co. may outperform their peers, Avic Securities Co. analyst Pei Yifan wrote in a report. 

China’s tourism-related stocks have been bottoming out after Hong Kong and Macau relaxed travel rules, and any signs of mainland authorities loosening their grips may further fuel gains. China Tourism Group Duty-Free Corp. is poised for the first monthly gain in three, up nearly 1% onshore. 

Retail Spending

The retail spending recovery this year has been constrained by on-and-off lockdowns in major cities, with the CSI 300 sub-gauge for consumer staples and discretionary shares on a downward trend since mid-year. 

A growing number of analysts are forecasting a rebound in consumption from the fourth quarter, anticipating some boost from the Party congress. Premier Li Keqiang said support policies should be fully implemented in the fourth quarter to promote a steady recovery, a CCTV report showed Thursday. 

Box Office 

The number of moviegoers will be closely watched after Covid outbreaks curbed box office growth this summer. China International Capital Corp. expects holiday ticket sales to fall from a year earlier even under the most optimistic scenario.   

Still, “if top movies record strong performance with high-quality content and word-of-mouth, total box office could receive a boost,” analysts including Zhang Xueqing wrote this week.  

Ticketing platform Maoyan Entertainment may release real-time sales statistics. 

Shares of movie makers such as Zhejiang Huace Film & Television Co., Bona Film Group Co., China Film Co., and Beijing Enlight Media Co. may benefit thanks to their high-quality content, CICC analysts said.