Investors ready for Shanghai-HK stock link

With the Hong Kong-Shanghai Stock Connect set to launch in mid-October, offshore investors have swarmed into a number of Hong Kong-listed exchange traded funds that invest in a portfolio of A-shares.

The first week of this month has seen more than 2 billion Hong Kong dollars flowing into several A-shares ETFs - funds listed on the Hong Kong Stock Exchange and use offshore renminbi to invest in shares traded at the Shanghai Stock Exchange, Shanghai Securities News reports.

Zhang Xiaojun, spokesperson with the China Securities Regulatory Commission, said on Friday that the stock connect scheme will do a test run on Oct. 13.

Interest in shares traded on the Chinese mainland bourse continues to ratchet up as many A-shares ETFs are now traded at a premium to the value of underlying shares they invest in.

Some Chinese companies listed in both Shanghai and Hong Kong stock markets have a price difference. A-shares ETFs have provided an opportunity for investors to take advantage of some duo-listed firms whose shares in Shanghai traded at a discount to those in Hong Kong.

The Hang Seng China AH Premium Index, an index tracking the average price difference for duo-listed Chinese companies in the Shanghai and Hong Kong bourses, has been trading bellow 100, indicating that duo-listed firms' shares on average are still traded cheaper in Shanghai.