Investment Analysis Report on the Collaborative Development Policy of Hong Kong and Hainan

Based on the latest policy developments and market data, I have prepared this comprehensive investment analysis report for you.

---

On December 18, 2025, the Hainan Free Trade Port officially launched full-island customs closure operation, marking a new phase for this national strategy. The Ministry of Commerce clearly stated its support for Hong Kong to integrate into and serve the overall national development, and to achieve complementary advantages and collaborative development with Hainan[1][2]. After the customs closure, the Hainan Free Trade Port will build a new pattern of “opening up at the first line, controlling at the second line, and free flow within the island”, and implement a policy system centered on “zero tariff”[3][4].

Hainan and Hong Kong are not in a zero-sum substitution relationship, but rather “super partners” with institutional complementarity and industrial synergy. As an international financial, shipping, and trade center, Hong Kong has unique advantages of backing the motherland and connecting to the world; the Hainan Free Trade Port is a landmark initiative by the country to promote the construction of a new system for an open economy, and the linkage between the two will produce significant synergistic effects[5].

Policy Dimension	Specific Content	Investment Impact
Zero-Tariff Expansion	Zero-tariff commodity lines expanded from 21% to approximately 74% (about 6,600 tariff lines)[4]	Corporate import costs reduced by approximately 20%
Tax Exemption on Value-Added Processing	Tariff exemption for goods with over 30% value-added from processing when sold to the mainland[4]	High-end manufacturing enterprises gain significant competitive advantages
Opening of Trade in Services	Expanded opening up in sectors such as healthcare and value-added telecommunications[1]	Significant increase in investment opportunities for the service industry
Cross-Border Data Flow	Hainan released a negative list for data outbound management[1]	Unlocking the value of data elements for tech enterprises

Data from the first day of customs closure shows: duty-free sales reached RMB 118 million, zero-tariff eligible goods imported through the “first line” amounted to RMB 360 million, and tariff-exempt goods with value-added from processing sold domestically under “second line” supervision reached RMB 14.689 million[6]. In the first three quarters of 2025, Hainan’s trade in services grew by 23.1%, and actually utilized foreign investment increased by 42.2%[1], indicating that policy dividends are being released at an accelerated pace.

---

The Hong Kong stock market has performed strongly recently, showing a significant recovery in 2025:

• Total Market Capitalization
  : Reached HK$48 trillion by the end of November 2025, a year-on-year increase of 41%[7]
• ETF Turnover
  : Average daily turnover of HK$34.1 billion, a year-on-year increase of 116%[7]
• Market Liquidity
  : Average daily turnover of approximately HK$210 billion, with cumulative southbound capital inflows of approximately HK$850 billion[7]
• Southbound capital
  maintains continuous net inflows, with finance, technology, and consumption as the main inflow sectors

Impact Path	Specific Performance	Impact Cycle
Capital Flow Effect	Hainan’s customs closure attracts international capital, and the Hong Kong stock market directly benefits as a bridge	Medium to Long Term
Industrial Synergy Effect	Complementary industries between Hainan and Hong Kong, increasing cross-border investment opportunities for enterprises	Medium to Long Term
Valuation Enhancement Effect	Valuation reconstruction of Hong Kong stock’s finance and shipping sectors	Medium to Long Term
Liquidity Improvement	Continuous southbound capital inflows boost market activity	Short to Medium Term
Investor Sentiment	Policy benefits increase market risk appetite	Short Term

Hong Kong’s international financial market and Hainan’s offshore trade and high-end consumer market complement each other’s advantages, jointly promoting Chinese enterprises “going global” and international capital “coming in”[5]. The collaboration between the two regions can address the shortcomings of “Guangdong’s strong industries but weak policies, Hong Kong’s strong services but limited space, and Hainan’s strong policies but weak industries”, forming a full-chain ecosystem of “R&D - Transformation - Application”[8].

---

: Increased cross-border financing demand, advancement of RMB internationalization, development of green finance

Stock Code	Company Name	Benefit Logic
0005.HK	HSBC Holdings plc	Leader in cross-border financial services, core constituent of Stock Connect
0388.HK	Hong Kong Exchanges and Clearing Limited	Directly benefits from cross-border capital flows and market expansion
2388.HK	Bank of China (Hong Kong)	Main player in cross-border RMB business, with well-established Asia-Pacific layout

:

• Hong Kong’s status as an international financial center will be further consolidated; HKEX launched the Tech 100 Index in 2025, tracking the 100 largest tech companies by market capitalization[7]
• Cross-border financial innovation will promote RMB-denominated settlement of shipping fuel, enhancing China’s pricing power in the international energy market[8]

: Accelerated port integration, upgraded shipping services, facilitated international trade

Stock Code	Company Name	Benefit Logic
0316.HK	Orient Overseas (International) Limited	Leader in container shipping, benefits from trade volume growth
1919.HK	COSCO Shipping Holdings Co., Ltd.	Port operation and integrated shipping services
0636.HK	Kerry Logistics Network Limited	Integrated cross-border logistics service provider

:

• Under the framework of collaborative development among Guangdong, Hong Kong, and Hainan, the deep-sea equipment cluster will be centered on Shenzhen, Hong Kong, and Yangpu Port[8]
• Green shipping has become a competitive focus, and Hong Kong has institutional advantages in ship registration, mutual recognition of crew qualifications, etc.[8]

: Upgraded duty-free shopping, growth in tourism consumption, facilitated brand access

Stock Code	Company Name	Benefit Logic
01880.HK	China Duty Free Group Co., Ltd.	Accounts for over 80% of Hainan’s offshore duty-free market share, directly benefits from customs closure dividends[9]
0178.HK	Sa Sa International Holdings Limited	Leading retailer in Hong Kong and Macau, benefits from consumption return
1929.HK	Chow Tai Fook Jewellery Group Limited	Leading jewelry retailer, beneficiary of consumption upgrade

[9]:

• Core Business
  : Offshore duty-free (over 80% market share in Hainan), port duty-free; core products are cosmetics (45% of revenue), luxury goods (25%), tobacco and alcohol (15%)
• Competitive Barriers
  : Policy barriers (scarce offshore duty-free licenses) and channel advantages (supply chain costs 15%-20% lower than cross-border e-commerce)
• Growth Logic
  : Offshore duty-free sales are expected to grow 40% year-on-year during peak seasons, and policy dividends will continue to be released after Hainan’s customs closure

: Cross-border data flow, transformation of scientific and technological achievements, construction of innovation ecosystem

Stock Code	Company Name	Benefit Logic
0700.HK	Tencent Holdings Limited	Leader in the technology sector, core target of the digital economy
0020.HK	SenseTime Group Inc.	Leading enterprise in the AI field, benefits from innovation policies
0852.HK	MicroPort Scientific Corporation	Medical technology enterprise, benefits from the pilot policies of Lecheng International Medical Tourism Pilot Zone

[10]:

• Daxiao Robotics, chaired by co-founder Wang Xiaogang, released the first industry-wide open-source Kairos World Model 3.0 (Kairos3.0), ranking among the top domestic tier in the commercialization of embodied intelligence

---

The Hainan Free Trade concept saw a collective surge after the policy was released, with multiple stocks such as Hainan Qionghai Traffic Group Co., Ltd. and Hainan Development Holdings Co., Ltd. hitting their daily upward limits[6]. Institutions point out that the consumer vitality stimulated by the release of policy dividends is expected to reduce the import tax burden of relevant enterprises by approximately 20%[6].

Sub-Sector	Benefit Logic	Investment Certainty	Representative Enterprises
Duty-Free Consumption	Zero tariff + upgraded offshore duty-free policy unlocks consumption potential	High	China Duty Free Group, Hainan Expressway Co., Ltd.
Transportation	Customs closure operation improves logistics efficiency and increases shipping demand	High	Hainan Qionghai Traffic Group Co., Ltd., Haixia Co., Ltd.
Tourism and Hotels	Accelerated construction of international tourism and consumption center	High	BTG Hotels (Group) Co., Ltd., Songcheng Performance Development Co., Ltd.
Healthcare	Medical opening-up pilot, facilitated import of drugs	Medium	Hainan Kangzhi Pharmaceutical Co., Ltd., Hainan Haiyao Co., Ltd.
Financial Services	Cross-border financial innovation, increased financing demand	Medium	Shanghai Pudong Development Bank Co., Ltd., China Merchants Bank Co., Ltd.
Real Estate	Industrial park development, increased office demand	Medium	Hainan Development Holdings Co., Ltd., Hainan Ruize New Building Materials Co., Ltd.

:

• In November 2025, Mao Geping (Hainan) Trading Co., Ltd. was established in Haikou with a registered capital of RMB 10 million, whose business scope includes wholesale and retail of cosmetics, import and export of goods, etc.[10]
• Directly benefits from the “Several Measures to Support the High-Quality Development of the Cosmetics Industry” issued by the Hainan Provincial Food and Drug Administration

The Hainan Free Trade Port is forming three characteristic industrial clusters[8]:

1. Deep-Sea Equipment Cluster
   : Centered on Shenzhen, Hong Kong, and Yangpu Port, developing underwater robots, intelligent ships, and deep-sea mining equipment
2. Green Energy Cluster
   : Promoting the integrated development of “offshore wind power + seawater hydrogen production + underwater data centers”
3. Marine Cultural Tourism Cluster
   : Integrating resources such as Shenzhen’s Dapeng Peninsula, Hong Kong Ocean Park, and Hainan’s Sanya to create high-quality “cross-border island-hopping tour” routes

---

Investment Strategy	Specific Recommendations	Target Investors
Core Allocation	Hong Kong Exchanges and Clearing Limited (0388), HSBC Holdings plc (0005), China Duty Free Group Co., Ltd. (01880)	Conservative Investors
Satellite Allocation	Orient Overseas (International) Limited (0316), COSCO Shipping Holdings Co., Ltd. (1919)	Aggressive Investors
Thematic Investment	Hainan Expressway Co., Ltd. (600886.SS), Hainan Qionghai Traffic Group Co., Ltd. (603069.SS)	High-Risk Investors

1. Policy Implementation Risk
   : Adjustments to the details of the customs closure policy may affect the degree of benefits for enterprises
2. Macroeconomic Volatility
   : Global economic uncertainty may affect trade and consumer demand
3. Valuation Correction Risk
   : A technical correction may occur after a large short-term increase
4. Industrial Implementation Progress
   : The actual implementation progress of some investment projects may be slower than expected

• Short Term
  : Pay attention to changes in market sentiment after policy release to seize trading opportunities
• Medium Term
  : Pay attention to changes in southbound capital flow and select sectors with continuous capital inflows
• Long Term
  : Pay attention to the actual business implementation of enterprises and select targets supported by substantial performance

---

The collaborative development policy of Hong Kong and Hainan has brought significant investment opportunities to the Hong Kong stock market and Hainan concept stocks. The core logic of the policy is that Hong Kong leverages its advantages as an international financial center, and the Hainan Free Trade Port leverages its advantages in institutional innovation, forming a “finance + real economy” synergistic effect.

:

1. Hong Kong stock’s finance and shipping sectors
   will directly benefit from cross-border capital flows and trade facilitation, and are recommended as key focuses
2. Among
   Hainan concept stocks
   , sectors such as duty-free consumption, transportation, and tourism and hotels have high investment certainty
3. In the medium to long term
   , with the continuous release of policy dividends and deepening industrial synergy, high-quality targets will continue to have opportunities for valuation re-rating

Investors should combine their own risk preferences and select targets supported by substantial business and with valuation advantages for allocation under the framework of policy benefits.

---

[1] Ministry of Commerce Regular Press Conference (December 11, 2025) - https://www.mofcom.gov.cn/xwfbzt/2025/swbzklxxwfbh2025n12y11r/index.html

[2] Ministry of Commerce: Supports Complementary Advantages and Collaborative Development between Hong Kong and Hainan - https://www.mofcom.gov.cn/xwfbh/2025n/202512/t20251218_10522948.html

[3] Jin10 Data: Interpretation of the Customs Closure Operation Policy for Hainan Free Trade Port - https://wallstreetcn.com/articles/3761791

[4] Hainan Free Trade Port Rewrites Enterprises’ “Business Playbook” After Full-Island Customs Closure - https://www.ndrc.gov.cn/wsdwhfz/202512/t20251224_1402604.html

[5] Liang Haiming: Win-Win Cooperation Between Hainan Free Trade Port and Hong Kong - https://m.thepaper.cn/newsDetail_forward_32286962

[6] Midday Review: Shanghai Composite Index Returns to 3900 Points, Hainan Free Trade Concept Stocks Surge Collectively - https://www.9fzt.com/9fztgw_1_bottom_D/512423d1f19c9732e602ed2fbfc39335.html

[7] Xinhua News Agency: Hong Kong “Revival” Observation - A Day in the Life of a Hong Kong Financial Practitioner - http://www.news.cn/gangao/20251229/efc4b03365164e6bae2573e04dbd9375/c.html

[8] Bay Area Review: Promote Cross-Regional Collaborative Development of Marine Economy Among Guangdong, Hong Kong, and Hainan Against the Background of Hainan’s Customs Closure - https://finance.sina.com.cn/roll/2026-01-06/doc-inhfiqwu6107854.shtml

[9] Full Reveal of Institutions’ January Layout Ideas - https://news.qq.com/rain/a/20260104A05VXA00

[10] Zhitong Hong Kong Stock Analysis: Hainan Free Trade Port’s Customs Closure is of Great Significance - https://hk.investing.com/news/stock-market-news/article-1241675