Here's how to make money from Syriza's big Greek election winFont size: A | A | A
12:33 PM ET 1/26/15 | MarketWatch
By Sara Sjolin, MarketWatch
Greek stocks and bonds might be your best bet, analysts says
LONDON (MarketWatch) -- There's a new Greek sheriff in town and he could shake things up in the eurozone.
Far-left, anti-austerity Syriza leader and winner of Sunday's Greek election Alexis Tsipras has promised to renegotiate Greece's bailout terms with the country's troika of international lenders: the International Monetary Fund; the European Central Bank; and the European Commission.
Investors across Europe will hold their collective breath while Tsipras does it.
Will he succeed? And if he does, what does that mean for other countries that have agreed to strict bailout conditions? Or if he doesn't succeed, is that goodbye to Greece as a eurozone member? In any case, the euro (EURUSD) is likely to take a further beating, analysts predict, creating valuable opportunities for investors.
"The euro will weaken -- perhaps to parity with the dollar -- over the next six months as investors seek 'safe havens' as other populist parties in the eurozone are likely to rise in the opinion polls and echo Syriza with their demands to end austerity," said Tom Elliott, international investment strategist at deVere Group, in a note. "Investors can expect Greek-led market volatility for at least six months until a Syriza-led government is better understood."
Dollar boom: From a currency perspective, that means investors will draw away from the euro and move into the dollar. If the shared currency does fall to parity with the buck, it means the dollar will have risen by almost 13% from current levels.
On Monday, the euro, however, strengthened against the dollar to trade at $1.1255 from $1.1208 late Friday in New York, which was more seen as an "overdue" rebound after last week's QE-fueled selloff, than a reaction to the Greek election result.
German exporters: The sliding euro is excellent news for Europe's exporters that will be able to sell their goods at lower prices outside the euro bloc, such as the U.S., the U.K. and Asia. Read: 15 European companies benefiting from a weak euro
"Indeed, one of the ironies of the euro crisis is that the more that Greece looks likely to cause problems for the single currency, the more Germany and the core economies benefit from resulting euro weakness," deVere Group's Elliot said.
That view was also echoed by Paul Sedgwick, chief investment officer of Frank Investments, who specifically pointed to German exporters as major beneficiaries of the Greek-induced volatility. Especially car makers, such as BMW , Volkswagen and Daimler , and heavyweight industrials like Siemens (SIEGY), are poised to do well, he noted. That also explains the DAX 30 index's reaction on Monday, when it rallied 1.4% for one of the biggest advances in Europe.
Greek assets: Defying your first instinct of fleeing Greek assets, investing in the country's bonds and equities might not be such a bad idea. Elliott pointed out that if you assume Syriza will want Greece to stay in the eurozone more than it wants to appease its eurocritic supporters, then you should dive into "Greek government bonds and anything that weakens as negotiations get tense, such as Greek stocks, particularly bank stocks."
That weakness was already prominent on Monday, when the Athex Composite slumped 3.2%, led by the banks. Piraeus Bank tanked 18%, while National Bank of Greece slid 13%.
The yield on 10-year Greek government bonds jumped 58 basis points to 9.054%, according to electronic trading platform Tradeweb.
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