BNY Mellon Asset Managements application for a Qualified Foreign Institutional Investor (QFII) licence has been successfully approved by the China Securities Regulatory Commission (CSRC).
BNY Mellon Asset Management is currently seeking approval from the State Administration of Foreign Exchange (SAFE) for an initial investment quota. The approval will allow BNY Mellon Asset Management to invest in Renminbi-denominated treasuries and Shanghai- and Shenzhen-listed ‘A’ shares on behalf of overseas investors.
BNY Mellon Asset Management also has an application lodged with the CSRC for a licence to establish a joint venture fund management company in China with Western Securities. The proposed new company, BNY Mellon Western Fund Management Company Limited, will initially manage domestic Chinese securities in a range of local retail fund products.
China launched the QFII scheme in 2003, allowing foreigners to invest in yuan-denominated bonds and stocks. According to local media publication Shanghai Securities news, $16.67 billion had been invested by 86 institutions by the end of 2009.
“Global investors cannot afford to ignore the investment potential of China,” said Jon Little, Vice Chairman of BNY Mellon Asset Management. “With a vast number of Chinese companies now cash rich, we expect merger and acquisition activity to continue, which may provide further support to share price valuations. China has been particularly active on this front; overseas direct investment jumped 190% in the third quarter of 2009 to US$20.5 billion as China took the opportunity to acquire resources while alleviating pressure on its currency.”
“China’s financial markets have developed very rapidly, spurred by investor demand and a clear regulatory framework. It is important that we can offer our clients access to the attractive investment opportunities here, and today’s announcement marks a critical step in the further growth of our business in China,” added Ronald P. O’Hanley, president and chief executive officer, BNY Mellon Asset Management.