Hang Seng Index forms death cross as Anthropic accuses Alibaba of distilling

The Hang Seng Index continued its strong downward trend this week, reaching its lowest level since June last year. HSI has dropped in the last eight consecutive days and is down by nearly 20% from its highest point this year. 

The Hang Seng has diverged from other global indices like the Nikkei 225 and Kospi that have soared to a record high. Worse, it has formed a death cross pattern, pointing to further downside. 

Hang Seng Index drops amid Alibaba and Anthropic feud

A key reason why the Hang Seng Index has crashed today is that Alibaba, a top Chinese technology company has gotten into a feud with Anthropic. Alibaba stock dropped by over 4.2% and was one of the top laggards in the index. 

It has plunged by 50% from its highest level in October last year. Most of the retreat started after its net profit plunged by over 80% in the first quarter. 

Now, however, Anthropic has accused Alibaba of campaigning to ‘brazenly’ and ‘illicitly’ extract its AI capabilities. The company made these claims in a letter to Senators Tim Scott and Elizabeth Warren.

Precisely, Anthropic is warning that Alibaba was distilling, a process where a small, less capable model is built using outputs from an existing model. In this case, it found that Alibaba entities carried out about 28.8 million exchanges with its models using over 25,000 accounts. 

The new claims could lead to Alibaba being targeted by the American government in some ways. For example, it may be removed from a list of ten Chinese companies that are allowed to buy Nvidia chips.

Xiaomi stock slips after Micron earnings

Meanwhile, Xiaomi's stock price retreated by over 3.5% and is one of the top laggards in the Hang Seng Index this year. It has retreated by over 50% from its highest point in 2025. 

Xiaomi stock dropped as the latest Micron earnings provided more data on the state of the memory industry. Its numbers showed that memory demand soared, a move that will lead to higher prices over time.  

The soaring memory prices have led to substantial impact on Xiaomi, including by slashing its profits and revenue growth. Its most recent results showed that its revenue dropped by 10.9% in the first quarter. Similarly, its profit for the period dropped by 56.5% in the same period. 

Meanwhile, Trip.com stock price plunged by over 10% today as investors react to its earnings report. While its revenue jumped by 17%, its earnings per share came short of expectations. 

The other top laggards in the Hang Seng Index were companies like Sunny Optical, CMOC Group, Laopu Gold, China Hongkiao, and Zijin Mining. Zijin Mining stocks plunged as metal prices retreated. 

Hang Seng Index technical analysis

HSI Index chart | Source: TradingView

The daily chart shows that the Hang Seng Index has been in a strong bearish trend in the past few months. It formed a death cross pattern as the 50-day and 200-day moving averages crossed each other. This pattern happened on June 17 and is one of the most bearish sign.

The index also formed a head-and-shoulders pattern, a common bearish sign in technical analysis. Also, the Average Directional Index (ADX) has soared, a sign that the crash is accelerating.

Therefore, the path of the least resistance is downwards, with the next key target to watch will be at $22,000.