China’s rampant market growth over the last year has stuttered. That might not be too surprising. The doubling of the Chinese market took place against a background of decelerating economic growth but even now Shanghai’s stock market still inspires plenty of bulls though on technical rather than fundamental grounds. MSCI recently announced that it would not incorporate Chinese A shares into its family of indices but other milestones on the path to internationalisation remain this year and some forecasters see this as adding support to the Chinese market.

This week, joining Brewin Dolphin’s Guy Foster, Head of Research is Louis Gave Founding Partner and CEO of Gavekal Dragonomics.

Louis remains confident that China will soon be included in the world’s big index families and that China’s currency will soon be included in the Special Drawing Right’s basket, of which there are only four members at the moment (U.S. dollars, Sterling, Yuan and the Euro). He mentions that even with a rejection, they could hold another decision next year, as opposed to the usual five year waiting period.

Apart from the fact the Chinese economy is one of the largest economies in the world, and as Louis sees it, still growing healthily, he cites the rejection from the Asian Development Bank and in doing so, setting up the Asian Infrastructure Investment Bank,  something which is now five times the size of its older rival. This he says only adds to the worry global institutions such as the IMF have about consistently rejecting China. 

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