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Research evidence excerpt

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Asia Pacific Equity Research AC Asia Pacific Equity Research

28 July 2026 J P M O R G A N

aprr.publications@jpmorgan.com

represent additional upside from our base case.

Hong Kong Property (Karl Chan)

Implications of China’s taxation on offshore trusts

China’s latest taxation on offshore trusts (20% tax rate) is not a major surprise, given Bloomberg’s late-

March report (link). However, the new framework appears stricter than expected, featuring retroactive

provisions (e.g., income from 2023 must be declared within 90 days) and enhanced anti-avoidance

measures (e.g., obtaining foreign citizenship alone may not eliminate tax obligations). While the move is not

specifically aimed at Mainland Chinese purchases of HK property, it still reduces the financial attractiveness

of holding Hong Kong real estate—and, more broadly, offshore assets—thereby we consider it directionally

negative for HK property. That said, we believe the impact is manageable, as we estimate <2% of property

sales are purchased via entities under Mainland Chinese-controlled offshore trusts, so this change alone is

unlikely to derail the current upcycle in home prices (although we believe the growth momentum will still

slow down in 2H26, regardless of this taxation – more in our earlier report). Arguably, this may also mildly

slow down the sales momentum among en-bloc commercial properties and thus drag the pace of property

companies’ capital recycling. In the near term, the concerns on capital outflow control and rate hike remain

two overhangs for the HK residential market, and thus we generally prefer landlords over developers. Our

top picks are Link REIT, Swire Propertiesand Hongkong Land.

China Auto Industry (Nick Lai)

Management comments on 2Q and 2H26 expectations