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Ask our experts

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The expert panel holds forth on vexing questions of investor interest:

Patrick Ho (head of equity research, APAC, UBS Wealth Management Research) is asked: What should investors make of the recent sell-off in the CNH currency? What does the move mean for yuan assets traded in Hong Kong?

The Chinese yuan has stayed around its post-revaluation highs against the US dollar in the onshore market amid the ongoing financial market volatility, signalling China's willingness for a gradual appreciation of CNY (yuan traded onshore in the mainland).

However, the market for CNH (offshore yuan traded in Hong Kong), which usually trades at a slight premium to the onshore CNY rate, has started to trade at a discount. We do not think this will be sustained, given that the CNY remained stable against the US dollar even during the 2008 financial crisis. We expect the CNH to revert and trade closer to the onshore CNY rate in the near term, as long as the People's Bank of China continues to keep the daily CNY rate steady against the US dollar, or guides the CNY stronger.

Therefore, investors can still use the CNH market to gain exposure to the CNY. The best approach is to create a diverse portfolio of Chinese yuan corporate bonds and stick to quality names, given the current sell-offs, liquidity squeeze and higher default risk for sectors such as Chinese property.

Mark Matthews (head of research for Asia, Julius Baer) is asked: Why are commercial banks printing Hong Kong's money?

Under British rule, Hong Kong had no central bank. That was not unusual; across Asia there were few central banks until after the second world war. In Hong Kong and other trading centres, business was done in silver-backed currencies such as Mexican dollars, bank notes from HSBC and Standard Chartered Bank, and British Trade Dollars.

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