Yes, The important part is RAW-legal
Unlike Magical Lineage, Wayang Spellhunter was never errataed to prevent spell-level lowering. In combination, the two can indeed lower a +1 spell level adjustment metamagic to -1, which can indeed make a 1st-level spell a level 0 spell, which, for some classes including the Magus, gives it special properties unique to 0-level spells (like not getting used up when cast).
That doesn't mean this should work
Just because the rules say something doesn't mean that is a good idea for your game. Running this trait in accordance with the rules makes it much more powerful than most other similar traits. You should consider denying it on the basis of game balance, or suggesting/allowing your other players to use similar exploits.
Note as well that shocking grasp is one of the weaker options for this combination-- it just does melee damage-- and that every spellcaster can have at most one spell specialized in this way.
If this build is likely to be overpowered, consider applying the errata to magical lineage to Wayang Spellhunter as well, as e.g. d20pfsrd suggests. If it is within reason for your game, it is, in fact, RAW and can work fine. If it is underpowered, suggest the player also use a feat on Sacred Geometry(quicken spell) so they can do it as a swift action instead, or some other potent metamagic-- Intensified Spell is particularly popular for a shocking grasp magus.
It's legal RAW.
Whether or not it's overpowered depends on your game. Most people think 'damage' is super cool and killing things is the definition of usefulness but i'd rather have a guy who can do 3d6 lightning damage at level 3 than a kobold fey-bloodline sorcerer who points his finger, says 'go to sleep', and wipes an encounter every single time a non mindless enemy appears.
Coup de grace with a scythe is 8d4, which is considerably more impressive, and you can have the whole gang doing the coup de grace if your enemies are all asleep.
Even random buffs like Enlarge Person tend to be pretty strong (put that on a fighter with a spear and combat reflexes and just trip anything that tries to get close), and arguably stronger than just doing damage due to all the little efficiencies that stack up.
But if you've got the kind of group that takes 5 combat rounds to finish off an ogre and thinks using a Tower Shield is OP supah cheese then shocking grasp spam might be too powerful.