Wall Street Hedging on War in Ukraine; Buying More Insurance

By Lawrence Delevingne

Wall Street is concerned enough about war breaking out in Ukraine that investment firms have sharply increased the insurance they buy to protect their assets in the region.

Last month, the percentage of hedge funds that purchased “deep downside” protection—a financial bet that would gain if there is a significant drop in global stocks—hit a two-year low of less than 13 percent. That spiked to more than 17 percent as of Monday, according to Credit Suisse data.

“There’s been an uptick in hedging activity—we’ve definitely seen funds add to … hedges in case the conflict escalates,” said Jon Kinderlerer, head of risk and portfolio advisory for the bank’s prime brokerage division.

Wall Street firms are buying more insurance to protect their investments if war breaks out in Ukraine  
ARTUR SHVARTS / EPA
Unidentified armed men block a Ukrainian military base near Simferopol, Crimea. Wall Street firms are buying more insurance to protect their investments if war breaks out in Ukraine.

Hedge fund clients of Credit Suisse had less than 0.5 percent of their portfolios exposed to Russia and Ukraine as of Monday. The real risk is from the likely global economic ripples in the event of more serious Russian military moves in Ukraine.

Read More: http://www.nbcnews.com/storyline/ukraine-crisis/wall-street-hedging-war-ukraine-buying-more-insurance-n45986

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Categories: Escalation / Destabilization Conflict

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