China's late July decision to tax offshore trusts held by its citizens has created a structural break in founder wealth management. The policy gives wealthy families 90 days—until Oct. 22—to settle tax obligations without penalties, compressing a forced liquidation window that is already reshaping Hong Kong-listed equities.
Haidilao International Holding co-founder Shu Ping sold approximately $350 million in shares following the announcement, triggering a 13 percent stock decline over two days and pushing the price to its lowest level since March 2022. The timing reveals a price disconnect: her husband, CEO Zhang Yong, had acquired shares months earlier at prices more than 20 percent above her recent selling price.
The tax legislation closes a long-standing loophole that wealthy families used to shield and transfer fortunes through offshore structures. Dong Yizhi, a lawyer at Shanghai-based Joint-Win Partners, said business owners likely view the current period as a favorable transitional phase, encouraging prompt settlement.
At least three other founder-controlled Hong Kong-listed companies face similar exposure: Li Ning, Xiaomi and Sunac China Holdings. Li Ning exemplifies the vulnerability—Viva Goods, a trust vehicle managed by the founder's family, holds approximately 19 percent of the company. Following the Haidilao announcement, Li Ning's stock dropped about 9 percent.
Morgan Stanley suggested the market overreacted to the offshore-trust tax changes regarding Li Ning. However, the broader Hang Seng Index has fallen about 3 percent in 2026, failing to benefit from the artificial intelligence hardware boom while contending with sluggish consumption and subdued earnings guidance for internet firms.
Yang Ruyi, a fund manager at Shanghai Prospect Investment Management, advises investors to screen Hong Kong stocks for two characteristics: founders controlling large stakes through offshore trusts and companies that have distributed substantial dividends and established trusts early. These profiles increase founder-selling pressure as the Oct. 22 deadline approaches.
Haidilao stated in a filing that Shu Ping's sale reflected the shareholder's funding needs and would not impact business operations or financial performance.
