Investors ready for Shanghai-HK stock link(2)

However, HSBC said in a recent research report that the price difference between A and H shares are expected to gradually close after the Shanghai-Hong Kong Stock Connect scheme is launched.

In addition to A-shares with price discount to the listed firm's H-shares, companies with lower valuation than comparable firms, those with high dividend or with dominant market shares will be favored by offshore investors, said Chen Li, chief China equity strategist at UBS Securities.

Besides, sector players that are scarce in the other market will also have potential to outperform, and many analysts have identified beverages, especially liquor, auto and defense stocks as popular choices among northbound investors, or offshore investors buying A-shares in the upcoming stock connect scheme.

The scheme to allow oversea investors to gain direct exposure to China's capital market has also rekindled confidence among retail investors on the Chinese mainland. Many expected the scheme could end the bearish performance of the Chinese stock market over the years.

The Shanghai Stock Exchange has rose more than 13 percent to close at 2,331.95 points on Friday since the second half of this year. Meanwhile, data from China Securities Depository and Clearing Corp. Ltd. shows that more than 170,000 A-share accounts have been opened during the week that ended August 24, and new account opening has hovered around 160,000 each week since then, a sign that retail investors on the Chinese mainland are making a comeback in the stock market, ready to pick up the slack.

Once the scheme is launched, it will draw more investment by institutional investor from offshore. HSBC estimates that the scheme will beef up institutional investors' presence in the mainland stock market to at least 10 percent of the A-share market, or 1 trillion U.S. dollars, by 2020.

Growing participation by offshore investors in the A-share market will also increase the representation of Chinese stock in global portfolio and thus help China make a stronger case in the accession to global benchmark indices such as the MSCI, the HSBC report said.