Hang Seng Forms Death Cross After Anthropic-Alibaba Dispute
Hang Seng fell to its lowest since June last year and formed a death cross after eight straight declines. Anthropic told U.S. senators Alibaba illicitly ‘distilled’ its AI.
The Hang Seng Index fell to its lowest level since June last year after eight consecutive trading-day declines and formed a death cross. The index is nearly 20% below its peak this year.
U.S. AI firm Anthropic wrote in a letter to Senators Tim Scott and Elizabeth Warren that Alibaba entities carried out about 28.8 million exchanges with its models using more than 25,000 accounts. Anthropic alleged the activity was an attempt to ‘brazenly’ and ‘illicitly’ extract its AI capabilities by ‘distilling’ — building a smaller model from outputs of an existing model.
Anthropic warned the allegations could prompt U.S. government action, including tighter export controls or removal of Alibaba from a list that currently allows certain Chinese firms to purchase Nvidia chips.
Market reaction was immediate. Alibaba shares dropped more than 4.2% and were among the biggest decliners in the Hang Seng. The stock has fallen about 50% from its October peak after Alibaba reported a more than 80% drop in net profit for the first quarter.
Technology and consumer names also weighed on the index. Xiaomi fell more than 3.5% after investors digested Micron’s quarterly results, which showed a sharp rise in memory demand. Higher memory prices have reduced smartphone makers’ margins; Xiaomi reported first-quarter revenue down 10.9% and profit down 56.5%.
Trip.com plunged more than 10% after posting a 17% increase in revenue while missing earnings-per-share expectations. Other laggards included Sunny Optical, CMOC Group, Laopu Gold, China Hongqiao and Zijin Mining, the latter pressured by falling metal prices.
Technical indicators reinforced the downward trend. The Hang Seng completed a death cross on June 17 when its 50-day moving average crossed below its 200-day average. The index has also formed a head-and-shoulders pattern and the Average Directional Index has risen. Market participants point to 22,000 as the next key support level.
Investors will monitor regulatory responses to Anthropic’s letter and upcoming corporate earnings for further signals on profit margins and demand.
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