The Hainan Free Trade concept gained strong momentum in late trading, with Luoniushan Co.,Ltd. (000735) skyrocketing to a limit-up in a vertical surge less than 10 minutes before the market close. Stocks related to the West Coast Straits concept remained robust throughout the session, with multiple names hitting 20% limit-ups.
On December 2, A-shares experienced a volatile correction, with the Shanghai Composite Index falling below 3,900 points and the BSE 50 Index also losing the 1,400-point level. The Shenzhen Component Index, ChiNext Index, and STAR 50 all declined, while losing stocks significantly outnumbered gainers. Trading volume shrank slightly to 1.61 trillion yuan.
Sector-wise, West Coast Straits, hotels & catering, Hainan Free Trade, and pharmaceutical commerce showed relative strength, while motor manufacturing, energy metals, film & cinema, and education & training lagged.
Wind data showed communications attracted over 3.5 billion yuan in net inflows, light industry manufacturing drew over 3 billion yuan, and defense & military secured over 2.8 billion yuan. Utilities and agriculture sectors each saw inflows exceeding 1 billion yuan, alongside retail, real estate, oil & petrochemicals, and building materials. Conversely, computers faced over 4.5 billion yuan in net outflows, with power equipment and non-ferrous metals also shedding over 3 billion yuan each.
Looking ahead, GF Securities noted that the most favorable "profit window" is about to open. Historically, the period between Chinese New Year and the "Two Sessions" parliamentary meetings delivers strong market returns—a phenomenon dubbed the "Spring Rally," typically lasting around 20 trading days. Post-holiday, large-cap trends often shift toward small-caps.
Huatai Securities highlighted rapid year-end sector rotation, recommending focus on export-oriented and tech-consumer plays. After recent adjustments, high-growth stocks with clear 2026 logic may lead rebounds. Seasonal sectors like snacks, frozen food, condiments, and dairy could benefit from pre-holiday restocking. For 2026, pro-cyclical sectors may see policy-driven valuation repairs, suggesting early positioning.
In market highlights, the Hainan Free Trade concept surged late. Luoniushan Co.,Ltd. (000735) rocketed to a limit-up on heavy volume, while Haima Automobile also locked in gains. Shennong Seeds, Xindazhou A, and Hainan Development showed late-session volatility.
The Hainan Free Trade Port will launch island-wide customs closure on December 18, 2025, unlocking core tax incentives: zero tariffs on imported goods, exemption for value-added processing, dual 15% corporate/personal income tax rates, and exemptions for overseas investment income in tourism, modern services, and high-tech sectors. High-end talent will enjoy tax relief above the 15% threshold.
Haikou Customs reported zero-tariff imports worth 27.188 billion yuan by October, saving 5.155 billion yuan in duties. Processing exemptions generated 11.096 billion yuan in domestic sales, with 860 million yuan in waived tariffs. Post-closure, zero-tariff coverage will expand from 21% to 74% of goods, accelerating policy benefits.
CITIC Securities emphasized the trade-focused impact of customs closure, boosting Hainan’s global tourism hub ambitions. Island tourism players (resorts, hotels, retailers, transport) stand to gain long-term.
West Coast Straits concept stocks hit record highs, with the sector index jumping over 2%. Jiarong Technology locked 20% limit-ups for two straight days, while Tender Group also surged 20%. Haixin Food notched five consecutive limit-ups, Ruineng Tech four, and over 10 others like Solar Cable, Pingtan Development, Straits Innovation, and Fujian Expressway rallied over 10%.
A recent Fujian provincial draft policy proposed enhanced integration between development zones, free trade areas, bonded ports, BRICS innovation hubs, and cross-border industrial parks.
Everbright Securities sees Fujian benefiting from policy tailwinds, industrial upgrades, and cross-strait synergy, recommending digital economy, AI, and integration-themed stocks.
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