Goldman Sachs is confident investors could profit from shorting Hong Kong property stocks against their Singapore counterparts.
With a pegged currency Hong Kong will have to respond to the declining Japanese yen through deflation while Singapore can let its dollar slide.
Deflation in Hong Kong need not necessarily lead to the market underperforming due to the international spread of earnings of listed firms, regional strategist Anand Aithal said.
'Spread trades between Singapore and Hong Kong seem to work better on specific sectors, notably property, than the overall market,' Mr Aithal said.
Hong Kong property firms could not move their assets to a more inflationary environment so would have to take declining prices on the chin, he said.
Fears about the currency peg might also prevent Hong Kong from following a further 100 basis points in rate cuts Goldman is expecting from the United States Federal Reserve by the end of the year.