The frame itself tells you how it works. (you just have to understand bike)
If it's intended to be an interrupted system (only the inner wire continues) there would have to be a stop the same way as there is for the rear loop on the typical chain stay. Without a stop there's no fixed cable length and the cut housing would be free to move in and out.
OTOH, if there's no stop and you can thread the housing through completely and out the other end, then that's the way it has to be.
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