PIMCO: "inclusion yuan in SDR the key that opens the door to Chinese capital markets"

A post from PIMCO on the importance they are placing on inclusion of the Chinese RMB in the IMF's Special Drawing Rights

• For China, the inclusion of the yuan in the SDR is ... potentially driving more market-related structural reforms
• (should result in) flows into the currency from the world's central banks and sovereign wealth funds, which should alleviate some concerns over the potential for capital outflows going forward
• From an investment standpoint, we think that the yuan is likely to remain reasonably stable over the next quarter
• However, given the changes made to the currency regime in August, there is more scope for the currency to adjust in value (weaken) over the next six to 12 months
• The inclusion of the yuan in the SDR is the key that opens the door to Chinese capital markets
• Chinese equities are likely to enter global emerging market indexes over the next year or two (they already have the second largest market capitalization in the world)
• And the Chinese fixed income market, the third-largest in the world, is likely to become a major part of the global investor toolkit over the secular horizon, as local market access for foreign investors continues to expand