Short-seller attack stuns SenseTime

Bloomberg and Reuters

SenseTime (0020) shares plummeted their most since April after short-seller Grizzly Research released a report accusing the Chinese AI company of inflating its revenues.

Grizzly cited documents and insiders describing how SenseTime engaged in what it called round-tripping, where it allegedly financed companies that in turn fed business to SenseTime.

SenseTime said the report "is without merit and contains unfounded allegations" in a filing to the exchange. Its stock tumbled as much as 9.7 percent before closing about 4.9 percent lower in Hong Kong.

SenseTime was blacklisted by the US government in 2019 on accusations related to human rights violations in China's far-western region of Xinjiang. That has restricted its access to capital and crucial US tech components, which has been compounded in recent months by new curbs on the sale of advanced AI chips and chipmaking equipment to Chinese firms.

Alibaba and Japanese investor SoftBank have been whittling down their stakes in SenseTime over the past few months. SenseTime is the latest in a line of high-profile Chinese companies Grizzly Research has targeted. It said in September it was shorting PDD. And in 2022, it issued a report critical of electric vehicle maker Nio (9866).

Meanwhile, the US dollar hit a three-month low against a basket of peers yesterday, as traders continued to unwind long dollar positions before this week's inflation data.

The dollar index is on track for a loss of more than 3 percent in November, its worst performance in a year.

Deutsche Bank expects the US Federal Reserve to slash the interest rate by 175 basis points next year as a mild recession arrives in the first half.