When Shanghai and Hong Kong first opened their stock markets to each other late in 2014, one hedge fund launched just to arbitrage the different valuations the two markets offered on the same companies.

Eighteen months on, that fund has closed and the valuation gap has widened. Yet even as worries grow over how China will balance growth with its need to work out its still-growing pile of debt, investors and index providers believe interest in trading Chinese stocks in Hong Kong and on the mainland is greater than ever — so much so that the first exchange-traded fund just launched, offering a similar arbitrage as the failed fund.

Two looming developments could bring a little more reality to what is still largely a theoretical opportunity since by most estimates foreigners hold just 2 per cent of China’s vast stock markets.