June 15 (Bloomberg) -- Investors should buy rubles against the dollar to profit from a temporary bounce in risk assets after Greek elections on June 17, according to UBS AG.
Buying the ruble at 32.40 to the dollar provides a potential 4.5 percent gain, Bhanu Baweja, emerging-market strategist at UBS in London, wrote in an e-mail to clients. Investors should abandon the trade if the ruble weakens to 33.05, he said.
Riskier currencies may bounce if Greek parties supporting a European bailout win the election, Baweja said. If they don’t, higher yielding assets can still rise as global policy makers may be forced to support markets, he said. Any surge in riskier assets will prove temporary, due to the euro zone’s structural problems, and a lack of sufficient policy response to weakening growth in the U.S. and China, Baweja said.
“This long risk recommendation is really just a tactical play that investors may or may not choose to participate in,” he said. “We have very little confidence in growth improving over the medium term.”
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