New York money manager and Forbes columnist Lisa Hess is betting that the European Union and IMF will not let Latvia fail.
Hess spells out her logic in the recent Forbes article Latvian Linchpin. Essentially, the tiny country got in over its head in the recent financial bubble and is now relying on IMF rescue money to avoid having to devalue its currency or possibly even having to default on its debt.
Hess predicts that the world’s central bankers will continue to support Latvia through its restructuring. She is buying Lativan bonds, but offers an alternative way to play the rescue. Turns out that Swedish banks are heavily exposed to Latvia.
The easiest and most efficient way to gain exposure to Swedish banks is through the iShares MSCI Sweden Index Fund (EWD). As of July 31, the Swedish ETF had 13% of the portfolio in Nordea Bank AB and 5% in Svenska Handelsbanken-A SH.