SCORES of Hong Kong-listed companies — many small — are on a roadshow blitz on the mainland to whet the appetite of mainland investors ahead of the launch of a cross-market investment link between Shenzhen and Hong Kong.

    Mainland investors are enthusiastic, viewing the cross-market channel as a way to buy relatively cheap growth companies and hedge against a rapidly falling yuan, which hit an eight-year low Friday against the U.S. dollar.

    “Valuations of Hong Kong stocks are very low. In addition, the Hong Kong dollar is pegged to the U.S. dollar, so when you buy Hong Kong dollar assets, you’re actually buying into the U.S. dollar,” Ma Hong, general manager of Shanghai TopFund Investment Management Co., said at an event in Shanghai promoting the Hong Kong-Shenzhen connect trading link.

    “For us, the Hong Kong market represents a strong currency plus cheap assets ... we need to embrace it.”

    Regulators on the mainland and in Hong Kong have not specified when the link would open, but the head of Hong Kong Exchanges and Clearing Ltd. said Friday it would go live “in a few more days.”

    The link would allow mainland investors access to about 100 smaller companies listed in Hong Kong. The existing Shanghai-to-Hong Kong link allows investment in 318 bigger Hong Kong-listed companies.

    Since the Shanghai link opened two years ago, mainland investors have bought a net 294.7 billion yuan (US$42.8 billion) in Hong Kong shares, more than double the purchases of Shanghai shares by Hong Kong, highlighting the more lukewarm interest of foreign investors in mainland-listed shares.

    The southbound money flow has halved the premium that Shanghai and Shenzhen listed shares had over Hong Kong shares this year alone.

    UBS forecast net inflows from the mainland into Hong Kong next year would be 160 billion yuan under the two links, but some are making bolder predications. Industrial Securities, a mainland brokerage, estimated that mainland insurers, which have recently been allowed to participate in the connect programs, will invest 400-600 billion yuan into Hong Kong stocks by the end of 2017.

    Zhou Jie, chairman of Haitong Securities, told a promotional event sponsored by the brokerage in Shanghai that there is pent-up demand on the mainland for global investment opportunities.

    The Shanghai and Shenzhen trading links provide a valve for that demand. But while they give mainland investors a chance to hedge against the falling yuan, they are closed systems aimed at preventing mainland money leaking offshore.

    Mainland investors pay for their Hong Kong purchases in yuan and receive the proceeds in yuan when they sell the shares. They can not use their Hong Kong shares as collateral for offshore loans.

    A range of companies, including Kingdee International Software Group Co., Bloomage Biotechnology Corp. and sportswear maker 361 Degrees, have taken part in the charm offensive.

    Others include Concord New Energy Group, natural gas seller Blue Sky Power Holdings Co. and public relations firm Wonderful Sky Financial Group Holdings.

    Many are hoping mainland investment will lift their share prices and market valuations and so boost their fundraising potential in the future.

    It could also add liquidity to trading in their stock, making the equity more attractive to a broader investment base.

    Still, firms will have to expect greater volatility, said Li Qian, board secretary of BYD Co., a Shenzhen-based automaker which is dual-listed in Shenzhen and Hong Kong. (SD-Agencies)