Get a second helping of dim sum bonds

Within the emerging markets space, currencies of current account deficit countries were the most affected, although many of these markets - notably India and Indonesia - have taken substantial measures since then to improve their fundamentals. However, investors in onshore renminbi denominated (CNY) and offshore renminbi denominated (CNH) bonds were among the best protected.

We're likely to see a repeat of this out-performance once the Fed completes tapering its asset purchase program. The higher-grade renminbi bonds, both CNY and CNH (or dim sum), offer investors greater security since policymakers in Beijing are likely to maintain the stability of the Chinese currency. As the risk of currency depreciation recedes, investors should get more comfortable owning short-maturity (less than three years) government bonds and high-quality corporate bonds.

The renminbi's weakness since the start of the year - which we believe was guided by the People's Bank of China (or the central bank) to flush out speculators who were excessively bullish on the currency's appreciation - is likely to have run its course, because the currency is now very close to the weakest end of the band within which the central bank aims to manage it against the US dollar. The central bank's recent actions suggest that it has stopped guiding the currency into weaker territory, raising the prospect of renewed, albeit gradual, appreciation.

With the likelihood of the downside being protected, investors have a rare opportunity to use the recent weakness to add a strategic asset class which is less correlated with a potential "sell-in-May" phenomenon. The CNY bonds offer an attractive 5.5-6.0 percent yield while the dim sum bonds yield a respectable 4.0-4.5 percent. On top of the attractive yields, there's scope for some currency appreciation. A helping of CNY or dim sum bonds could be just what investors may want to add to their plate.

The author is chief investment strategist in the wealth management unit of Standard Chartered.