A potential Greek default would hurt banking sectors in various Eurozone member states and provide a large blow to the overall equities market.
“European equities are more vulnerable to peripheral sovereign risk than U.S. stocks, as banks in Germany, France and the U.K. represent 22% of the stock market value there,” added Alec Young, S&P international equity strategist. “Many of these banks have high exposures to Greece and other troubled European countries, which we think threatens their profitability and depresses their valuations.”
The S&P research team lists four ETFs that have significant exposure to Europe and the financial sector:
- iShares MSCI EAFE Index Fund (NYSEArca: EFA). The fund has a 22.65% weighting in the financial sector, with a 12.04% exposure to the diversified banks sub-industry.
- Vanguard MSCI Europe ETF (NYSEArca: VGK). The fund has a 21.29% weighting in the financial sector, with a 11.40% exposure to the diversified banks sub-industry.
- iShares S&P Europe 350 Index Fund (NYSEArca: IEV). The fund has 22% in the financial sector, with 11% in diversified banks.
- iShares MSCI EMU Index Fund (NYSEArca: EZU). The fund has 22% in the financial sector, with 12% in diversified banks.
iShares S&P Europe 350
Max Chen contributed to this article.