Hope you had a great weekend! 

Key News

• March Industrial Profits increased 13.9% year over year to RMB 589B ($87B) though Q1’s -3.3% YoY according to the National Bureau of Statistics. Investors have become concerned that too much good news could lead to less stimulus. It is unlikely that stimulus would be pulled though we are not apt to see further stimulus.
• It will be a quiet week with HK closed Wednesday and mainland closed Wed, Thur and Friday though April PMIs are expected this week.

The Hang Seng gained +0.97%/+287 index points to close just below 30k at 29,892 on light volumes off 13% from Friday. Breadth was strong with 40 advancers and 8 decliners as Tencent gained +1.72%/+53 index points, Ping An +2.39%/+37 index points and CCB +1.16%/+26 index points. The HK stocks within the MSCI China All Shares +0.94% led higher by staples +1.42% while Tencent pulled communications +1.28%, financials gained +1.06% and real estate +1.01%. Tech was the only sector down losing -0.61%. Southbound Stock Connect is closed this week.

Shanghai & Shenzhen had a choppy session selling into the close to end -0.77% and -2.41% on light volumes +3% day over day. There was a massive divergence between large caps and small caps as investors have become concerned about the latter’s earnings. Mega/large caps actually gained 1.61% while small and mid caps lost 2.6%. Healthcare and staples gained +1.89% and +1.65% while tech and materials lost -2.8% and -1.98%. Northbound Connect volumes were elevated as foreign investors bought $673mm. Volume leaders Ping An and Kweichow Moutai both saw buyers outpace sellers. 

Naspers will exchange its investment in Indian online travel agency MakeMyTrip for a 5.6% ownership in Ctrip 

CNY 6.73 versus 6.73 Friday

• Yield on 1 Day Chinese Gov’t Bond 1.92% versus 2.05% Friday
• Yield on 10 Year Chinese Gov’t Bond 3.44% versus 3.44% Friday
• Yield on 10 Year China Development Bank Bond 3.84% versus 3.84% Friday

Commodities were higher on the Shanghai & Dalian Exchanges with Dr. Copper +0.04%