Wall Street is concerned enough about war breaking out in Ukraine that investment firms have sharply increased the insurance they buy to protect their assets in the region.
Last month, the percentage of hedge funds that purchased "deep downside" protection—a financial bet that would gain if there is a significant drop in global stocks—hit a two-year low of less than 13 percent. That spiked to more than 17 percent as of Monday, according to Credit Suisse data.
"There's been an uptick in hedging activity—we've definitely seen funds add to ... hedges in case the conflict escalates," said Jon Kinderlerer, head of risk and portfolio advisory for the bank's prime brokerage division.
Hedge fund clients of Credit Suisse had less than 0.5 percent of their portfolios exposed to Russia and Ukraine as of Monday. The real risk is from the likely global economic ripples in the event of more serious Russian military moves in Ukraine.
"Ukraine is a non-issue for hedge funds, but if conflict breaks out, the region becomes a wider risk for them. There would likely be a flight to quality out of emerging market stocks. Treasurys and gold would also rally," Kinderlerer said.
Charlemagne Capital, a $2.7 billion asset manager that focuses on emerging markets, especially in Russia and Eastern Europe, recently told clients its exposure to Ukraine was minimal, but there was still cause for concern.
The one exception, Russian telecommunications group Mobile TeleSystems, has less than 10 percent of its sales in Ukraine. But the firm is switching the holding into another stock, according to the client note.