JPMorgan Chase & Co. recommended cutting Russian stock holdings on concern foreign investors will unwind bullish bets amid elevated tensions over Ukraine.

The bank reduced its rating to underweight from overweight, according to a report by strategists including Hong Kong-based Adrian Mowat dated yesterday. Emerging-market money managers will probably cut positions because their Russian holdings were more than double the long-term average in January, Mowat wrote.

JPMorgan is betting it’s not too late to sell after President Vladimir Putin’s buildup of Russian troops in Ukraine prompted a threat of economic sanctions from the U.S. and fueled a 10 percent tumble in the benchmark Micex index during the past two weeks. The central bank’s efforts to stem the ruble’s slide to a record by raising interest rates will weigh on economic growth and the stock market, according to Mowat.

“We are reacting to the increase in geopolitical risk,” he wrote. “A short term bounce is unlikely.”

The strategist favors exporters over banks, telecommunications companies and retailers. The weaker ruble, higher inflation, and lower confidence among businesses will curb domestic demand and investment, Mowat wrote.

As Crimean separatists backed by Russian forces pushed to split from Ukraine, the U.S. banned visas for Russian officials and others it said were complicit in violating the sovereignty of the ex-Soviet state of 45 million.

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U.S. President Barack Obama signed an order authorizing financial sanctions, while European Union leaders halted trade and visa talks with Russia and threatened punitive economic measures in what’s become the worst rift between Russia and the West since the Cold War era.

The risk to cutting holdings now is that Russia and western leaders take steps to reduce geopolitical tension, according to JPMorgan.

Obama told Putin in an hour-long phone call today that Russia’s actions have violated Ukraine’s territorial integrity and brought on the penalties unveiled by the U.S. and EU, according to a White House statement. Obama said the standoff can be resolved diplomatically, through talks between Russia and Ukraine’s government, the White House said.

Putin and Obama hold differing views on the crisis, though U.S.-Russia relations shouldn’t be sacrificed, the Kremlin said in an e-mailed statement on the leaders’ conversation.

The Micex index (INDEXCF) is valued at 4.8 times analysts’ earnings estimates for the next 12 months, the lowest level among 45 emerging and developed markets tracked by Bloomberg. The gauge has dropped 11 percent this year, following a 2 percent gain in 2013.

Bloomberg