Haidilao International’s stock plunged following a $350 million share sale by its co-founder, highlighting risks that new Chinese tax rules on offshore trusts could trigger more founder-led stock selloffs, particularly among Hong Kong-listed firms controlled by wealthy families.
- China’s tax on offshore trusts targets wealthy founder-controlled firms.
- Haidilao shares dropped after co-founder Shu Ping sold $350 million stake.
- Tax deadline in October may trigger more founder stock disposals.
What happened
In late July 2026, China introduced tax regulations affecting offshore trusts held by its citizens, a move aimed at closing tax avoidance channels previously exploited by wealthy families to safeguard and transfer assets. Soon after, Haidilao International Holding experienced a significant stock decline following a $350 million share sale by its co-founder Shu Ping. The firm attributed the sale to the shareholder’s funding needs and said it would not impact the company’s operations or financial health.
This sale has drawn attention to other founder-controlled Chinese companies with large shareholdings via offshore trusts, such as Li Ning, Xiaomi, and Sunac China Holdings. Data indicates several other major Hong Kong-listed companies may face similar risks, especially as the grace period to settle related taxes without penalties ends on October 22, 2026.
Why it matters
The new tax policy disrupts a legacy practice that allowed substantial offshore wealth holdings to go largely untaxed, putting pressure on controlling shareholders in China and Hong Kong to adjust their financial positions. Founder-led share sales in response to tax compliance can result in heightened market volatility and downward pressure on stock prices.
The Hang Seng Index has already underperformed in 2026, and concerns over founder share sales could further dampen investor confidence in Chinese stocks listed in Hong Kong. Analysts warn that companies with founder stakes held in offshore trusts who have also paid substantial dividends could be particularly vulnerable to share disposals and increased trading volatility ahead of the tax deadline.
What to watch next
Investors should monitor shareholding changes and block trades in founder-controlled companies with offshore trust ownership, especially as the October tax compliance deadline approaches. While some founders may have limited tax liabilities compared to their wealth and thus less incentive to sell, others may choose to liquidate shares to meet tax obligations, creating selling pressure on their stocks.
Market participants will also look for further corporate disclosures or market moves from other major Chinese firms with similar offshore trust structures, such as Li Ning and Xiaomi. Keeping an eye on trading volumes and price movements in these stocks may provide early signals of broader founder share disposals triggered by the tax changes.