Haidilao International Holding Ltd.'s shares tumbled 13% after co-founder Shu Ping sold about $350 million worth of stock, highlighting risks for other founder-controlled Hong Kong companies following China's July move to tax offshore trusts. The policy closes a loophole wealthy families used to protect fortunes, with a 90-day grace period ending Oct. 22. Lawyer Dong Yizhi of Joint-Win Partners said owners view this as a favorable transitional phase to settle tax obligations early.

Bloomberg data shows large offshore trust stakes at Li Ning Co., Xiaomi Corp., and Sunac China Holdings, though no founders have indicated plans to sell. At Li Ning, Viva Goods Co. holds 19%; Modern Leaves Ltd. owns 41% of Guming Holdings; and Smart Mobile Holdings Ltd., controlled by Lei Jun, holds 8.9% of Xiaomi. Morgan Stanley noted Viva continues buying shares despite new rules.

The Hang Seng Index is down 3% this year, missing the AI boom. Fund manager Yang Ruyi of Shanghai Prospect Investment Management Co. warned stocks with early offshore trusts and substantial dividends face heightened volatility. Citigroup analysts including Xiangrong Yu said block trades offer liquid monetization paths. While tax bills may be small relative to wealth, Haidilao's sale — notably after CEO Zhang Yong bought shares at 20% higher prices — signals potential for more founder disposals.