BNY Mellon Asset Management has been granted a licence by the China Securities Regulatory Commission to invest in yuan-denominated securities under the qualified foreign institutional investor scheme.

"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," David Jiang, chief executive for BNY Mellon's Asia business, said in a statement. "Global investors cannot afford to ignore the investment potential of China."

The company has been keen on securing a QFII licence as part of its long-term growth strategy in the Asian region. It is now waiting for a regulatory go-ahead for its planned asset management venture with China-based Western Securities Co, to be called BNY Mellon Western Fund Management Company Limited, in a bid to tap the country's $380 billion mutual fund sector.

Under the QFII programme, foreign institutions are allowed to invest in Chinese stocks and bonds within a pre-set quota. As of 2009, the Chinese government had granted a total of $16.67 billion in quotas to 86 foreign investors.