Tags: Investors | underpricing | risk | Ukraine

Analyst Spiro: Some Investors 'Underpricing Risks in Ukraine'

By    |   Friday, 25 April 2014 10:02 AM

Some investors are a bit too blasé about the turmoil in Ukraine, says Nicholas Spiro, managing director of consulting firm Spiro Sovereign Strategy.

"We have already gone from the annexation of Crimea to military operations in eastern Ukraine in the space of just several weeks," he told CNBC.

"Eastern Ukraine is a higher-stakes and more dangerous battleground, with ample scope for things to spiral out of control. Investors banking on a 'tense but manageable' scenario are underpricing the risks."

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Meanwhile, Marshall Gittler, head of currency strategy at IronFX Global, an online trading firm, says selling Eastern European currencies may be the strategy for investors looking to profit from Russia's adventurism in Ukraine.

"In theory, the obvious way to prepare in the FX market should be to sell the Russian ruble, but that might not be the best way," he writes on CNBC.com.

"The Central Bank of the Russian Federation has some $482 billion in foreign exchange reserves and gold — more firepower than the market can throw at it."

But the currencies of the other Eastern European countries are more vulnerable, Gittler says. He cites Poland, the Czech Republic and Hungary as examples.

The standoff between the U.S. and Russia over Ukraine is putting pressure on financial markets around the world.

"The level of tension between the U.S. and Russia is obviously fueling concern among investors," Kazuhiko Saito, a Tokyo-based analyst at commodities broker Fujitomi, told Bloomberg.

"Even though we may see some technical retreat after a strong rally [in commodities], the trend is likely to continue as the situation isn’t going to resolve itself anytime soon."

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Some investors are a bit too blasé about the turmoil in Ukraine, says Nicholas Spiro, managing director of consulting firm Spiro Sovereign Strategy.
Investors, underpricing, risk, Ukraine
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2014-02-25
Friday, 25 April 2014 10:02 AM
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