2 ASX-listed ways to play a Greek Eurozone exit

The BetaShares Euro ETF (ASX:EEU) and a few other stocks are great ways to take advantage of an impending 'Grexit'.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Do you remember the market panic when Greece first looked like defaulting on its Euro debts?

I do – distinctly – because I'd just bought a bunch of cheap stocks before watching the S&P/ASX 200 (INDEXASX:XJO) plunge 25% from nearly 5000 to below 4000. Ouch. At the time the Greek crisis was the only show in town, plastered across all the headlines.

Four to five years later, when it looks like Greece could really exit the Eurozone for good, the Australian market is just ho-hum.

We've seen it all before, after all.

But the main German and French indices dropped 2% each in a single day yesterday, and there'll be plenty more where that came from if Greece and its creditors can't agree on a funding plan which – according to Fairfax media – needs to be agreed this week at the latest in order to give everyone involved time to vote on the arrangement.

Foreign markets may not hold a lot of appeal for some Australian investors, many of whom are still coming to terms with owning Australian companies and find unknown foreign companies alien and confusing.

I don't own any foreign-listed companies myself, but a potential 'Grexit' is too great an opportunity to pass up. There are a number of ways to play the situation, and it's possible to gain 100% Eurozone exposure from the safety of the ASX.

The first opportunity I'm eyeing off is the Australian iShares Europe Exchange Traded Fund (ETF), also known as ISHEUROPE CDI 1:1 (ASX:IEU). This ETF tracks 350 stocks diversified by region and is a great way to catch a widespread fall in Eurozone markets.

IEU dropped as low as AU$32 in the wake of the last Greek crisis and while I don't expect it to go as low now, prices of $40 or so ($64 currently) look like an attractive long-term entry point. More importantly, Euro nations are far more robust thanks to the economic recovery of Spain, Ireland, and Italy, which reduces risk substantially.

A more direct way to gain pure Euro currency exposure without the equities is the BetaShares Euro ETF (ASX: EEU), which is designed to mirror the AUD-EUR currency relationship. Theoretically if the Euro falls 10% against the AUD, this ETF should fall too. Of course this is an investment to buy AFTER a Greek exit happens.

The iShares ETF currently has a management fee of 0.6% per annum, while the BetaShares Euro ETF charges 0.45%.

Alternatively if you're not feeling quite that adventurous you can try owning Australian shares that have significant earnings in the Eurozone. It's less likely that these shares will fall in the event of a Greek dramas but even so; Brambles Limited (ASX: BXB) earns one third of its revenue in the Eurozone. Westfield Corp Ltd (ASX: WFD) earns a similar and growing percentage, while Domino's Pizza Enterprises Ltd. (ASX: DMP) is also expanding in the region.

This time around I'm not expecting Greek problems to have a major long-term impact on Australian markets. But the possibility of a crash is no doubt on the minds of many investors who recall the GFC, and look at the lofty valuations of many ASX-listed companies with some discomfort.

Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »