SocGen's 3 Ways To Play A Brexit

In a new report, Societe Generale analyst Roland Kaloyan discussed how investors should trade the possibility of a British exit from the eurozone. Societe General has three portfolio protection strategies that it is recommending ahead of the referendum vote.

1. Buy SG Cable Basket Of Stocks

The firm has created a basket of UK stocks that are sensitive to the GBP, which would likely weaken in the case of a Brexit. Some of the Buy-rated names in the basket that also have U.S. listings are Barclays PLC (ADR) BCS, HSBC Holdings plc (ADR) HSBC and British American Tobacco PLC (ADR) BTI.

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2. Go Short FTSE 250/Long FTSE 100

U.S. investors don’t have access to ETFs that track these two indices, but there are plenty London-traded ETFs that do, including the BlackRock 100 UK Equity Tracker and the iShares FTSE 250 UCITS ETF.

3. Go Long Brexit+/Short Brexit- Stocks

Again, the majority of these stocks are not U.S.-listed, but several of them are. The full list of Brexit+/- stocks is included in the chart below.

For now, the firm believes that the U.K. market is fairly valued and that the nation will most likely elect not to leave the eurozone.

So far this year, the iShares Trust EWU is down 3.9 percent on Brexit fears.

Disclosure: The author holds no position in the stocks mentioned.