Haidilao (06862.HK) experienced a sharp selloff during Monday's trading session, with shares tumbling more than 12% at one point to HK$10, marking the lowest level since August 2024. By the time of writing, the stock had pared some losses to trade at HK$10.33, still down approximately 9.23%, with trading volume surging to over HK$3.3 billion.

Market activity showed multiple block trades executed during the pre-opening auction session, involving approximately 259 million shares at an average price of HK$10.62 per share. This represented a discount of about 6.68% from the previous day's closing price of HK$11.38, with total transaction value reaching approximately HK$2.75 billion. Market speculation suggests the stake reduction may be attributed to Shu Ping, spouse of Haidilao Chairman and CEO Zhang Yong.

According to reports, Shu Ping plans to sell 259 million shares through UBS at a price range of HK$10.60 to HK$10.70 per share, representing a discount of 5.98% to 6.85% compared to the prior session's closing price. Morgan Stanley issued a report noting that the major shareholder's stake reduction could exert pressure on market sentiment in the short term, until investors regain confidence in the company's earnings outlook and become assured that no further asset divestments will occur.

The investment bank also expressed surprise at the timing of the share sale, given that Zhang Yong had increased his holdings by approximately 11.35 million shares at HK$13.39 per share back in May. Morgan Stanley maintains an 'Overweight' rating on Haidilao with a target price of HK$16.5.