A-Shares Slump Might Reduce the Chances of RMB's Inclusion In the SDR Basket
ANBOUND
The slumping A-shares have finally come to a halt after a series of stimulus measures introduced by the Chinese government, RMB too has shown sign of stabilization, Anbound's scholars, however, point out that this disaster reflects that the Chinese government has yet to loosen their grip on their intervention in the stock market. The aggressive measures employed by the Chinese government in rescuing the stock market seems to have frighten the foreign capitals away, and the market is worried that this might have far reaching impacts on the liberalization of capital account and internalization of RMB. The mainland’s decision in holding the stock market could have accelerated the capital flight and caused the International Monetary Fund ("IMF") to be more cautious when considering whether to include RMB into Special Drawing Rights (“SDR”) basket.