Flick open the business pages of any newspaper and there is every chance you will find pundits advocating a defensive investing strategy for these turbulent times.
A defensive strategy is a fancy name for what used to be called cautious investing. It is low-risk investing with the goal of steady yields and less volatility.
Bonds tend to be seen as the most popular of defensive investments because they generally yield more than plain old bank deposits. In Hong Kong, however, investors benefit from the fact that local banks offer an impressive array of deposit options in a large variety of currencies. But beware because banks seem to be pushing so-called special deposits in foreign currencies, which are great for the banks but generally terrible for customers.
In essence they are nothing more than a 'heads I win, tails you lose' option for bank customers. Investors are invited to take out a foreign-currency deposit for a fixed period (usually one month), with the tempting offer of higher returns than the prevailing interest rate on that currency. However, to get the higher yield you need to fix the conversion rate at a figure often substantially less than the prevailing rate.
If the conversion rate drops to that level, the customer gets the higher rate of interest. If it does not, they get nothing (however the original investment is returned).
What this means if that if you pick, say Australian dollars, and the Hong Kong dollar conversion rate rises relative to the Ozzie, you do not benefit from the price rise but get more interest.