Chinese shares declined Friday as tech stocks came under fire amid allegations of Alibaba's (HKG:9988) illegal extraction of Claude's AI capabilities and investors balked at massive spending on artificial intelligence.
The Shanghai Composite Index, the main gauge of Chinese stocks, fell 2.2% to 4,027.27. The Shenzhen Component Index plunged 3.4% to 15,782.22.
Anthropic, the makers of the Claude artificial intelligence model, accused Alibaba of illegally scraping Claude AI data via 28.8 million exchanges from 25,000 fake accounts between April and June.
Meanwhile, Gary Dugan of The Global CIO Office said markets are now demanding tangible monetization for AI companies, not just narratives, The South China Morning Post reported. He said the sell-off reflects growing skepticism over whether massive AI capital spending can justify stretched valuations in an uncertain macro environment.
While investors still like AI, they are unwilling to pay one price that assumes everything-long-term growth, better margins, and market dominance-all at once. The market is pivoting to execution from concept, which is a healthy reset but will lead to greater performance dispersion among players.
On the regulatory front, the People's Bank of China will increase the overnight reverse repurchase operation in its open market operations on June 29 and June 30. The operation will adopt a fixed interest rate and quantity bidding. Analysts see the move as a major step toward aligning with U.S. policy rate structures.
The central bank also injected 500 billion yuan into the country's banking system via a one-year medium-term lending facility operation to stabilize banking system liquidity. The move will result in a net injection of 200 billion yuan after offsetting maturing funds of 300 billion yuan.
In company news, Hui Lyu Ecological Technology (SHE:001267) 51%-owned Wuhan Junheng is injecting 110 million yuan into wholly-owned Hubei Junheng to shore up funding for the Ezhou optical module production base. Shares of the landscaping company closed 10% lower Thursday.