HONG KONG (MarketWatch) — When MarketWatch covers Chinese stocks, we usually focus on those listed in Hong Kong. The reason for this is that few outside of China — mainly just institutional investors with approved quotas — are able to buy what’s sold in Shanghai, Shenzhen and the other mainland Chinese bourses, while any investor in the world can buy Hong Kong-listed names.

But this is all about to change in a big way next Monday, when China launches its game-changing “Shanghai-Hong Kong Stock Connect” program. For the first time ever, retail investors around the world will be able to invest in mainland Chinese equities.

In some high-profile cases, the same companies have stock listing in both Shanghai (known as “A-shares” when denominated in yuan) and Hong Kong (“H-shares”), though here too, opportunities exist in the form of arbitrage, as a given company’s A-shares and H-shares rarely trade at the same level.

“Many international investors are completely excited,” Charles Li, the chief executive of bourse operator Hong Kong Exchanges & Clearing (HKEx) 388, -1.50% HKXCF, +0.25% , told MarketWatch at a recent media availability.

“This is probably the last frontier market that has yet to open,” Li said, “and they [global investors] probably have never seen a rebalancing possibility like this scale anytime in past history.”

As the head of Hong Kong’s stock exchange, such excitement is clearly in Li’s interest, but he’s not the only one who sees the Stock Connect as a sea change for global stocks.

Goldman Sachs, for instance, said in a recent note that the opening of Shanghai to foreign investors is an opportunity “simply too big to ignore.”

“The scheme essentially ... creates the world’s second-largest equity market by market cap,” second only to the New York Stock Exchange, Goldman Sachs said. In cash-trading terms, the new China mega-bourse would come third globally, behind the NYSE and Nasdaq.

The Goldman Sachs analysis notes that the Stock Connect could eventually “add 855 companies with over $1 billion of listed market cap to the investable universe, assuming full liberalization” in which foreign investors can buy all A-shares listed not just in Shanghai, but also on the Shenzhen exchange as well.

That said, there will be limits to the action, at least at first, with A-share purchases made from Hong Kong restricted to a daily quota of $2.1 billion. Likewise, Shanghai-based investors will be held to turnover of $1.7 billion a day.

Beyond the changes for investors, many market participants have said that the new system is also an important piece in China’s market-reform measures.

“It’s a state policy rather than a simple move concerning one or two cities’ stock markets, “ says China Merchants Securities managing director Ronald Wan. “The scheme is a key step in the Beijing government’s plan to reform the country’s capital market and financial system, and a crucial part of China’s broader and structural economic reform.”

Likewise, the new cross-trade will help promote the internationalization of the Chinese yuan, and will also allow the nation’s regulators to better control the risks of capital flight, given the way the program is set up, according to HKEx chief Li.

“We believe we have achieved a breakthrough in how to achieve mutual market access without forcing the market to undertake undue changes to the current structure,” Li said.

And certainly, the two markets have some large differences in their regulations, such as Shanghai’s curb on intraday trading and the fact that it doesn’t use market makers.

As for completely opening all mainland Chinese markets to the world, Li believes that further reforms are “unfortunately not going to happen anytime soon,” with a cautious, step-by-step approach toward full market liberalization much more likely.

But if China is putting its stocks on sale, will the world buy? Chen Li, head of UBS’ Chinese equity strategy, told MarketWatch that the new scheme will draw in a strong constituency of China bulls.

“The Stock Connect program would widen the investment choices of foreign investors who are optimistic about China’s growth,” Chen said, adding that money from overseas will play an outsized role in setting valuations.

Given what happened in South Korea and Taiwan when those markets opened up to foreign capital, the international investors will be key to pricing the blue chips, Chen said.

And then there’s the arbitrage opportunities. Goldman Sachs said that investors may focus on dual-listed Chinese companies with Shanghai shares that trade at a discount to their stock in Hong Kong.

More generally, Goldman Sachs said, A-shares seem to be more sensitive to economic growth than the H-shares are. Also, the Shanghai market tends to have better depth (in terms of market capitalization and liquidity) and breadth (such as the total number of companies) relative to the Hong Kong exchange.

As for stock picks beyond the top blue chips, Goldman Sachs said investors might be drawn to some “scarce” sectors — available only in Shanghai — which are more sensitive to China’s policies. They offered cable and satellite telecommunications, retail pharmacies, mining and publishing as examples of these.