Cyprus' struggles to regain control of its ongoing financial crisis continue, as banks reopen with severe restrictions after nearly two weeks. International lenders are regulating the amount Cypriots are able to withdraw, liming transactions to 300 euros a day in an effort to prevent a run on deposits. Earlier this week, Cyprus agreed to raise billions of euros from depositors to secure a $13 billion European Union Rescue package, averting the collapse and bankruptcy of the state.

But despite the last-minute deal and banks reopening their doors on Thursday, investors fear rising volatility. Uncertainty over the country’s financial sector is driving bearish bets on exchange-traded funds with significant exposure to stocks listed in Cyprus.  

“Cyprus is a very, very dangerous place,” said Oliver Pursche, Gary Goldberg Financial Services President. “If Cyprus becomes a template like some are suggesting and you’re a wealthy individual that’s got a lot of money in the banks, you’re going to pull it out. This type of run on the bank is very dangerous, especially for feeble and weak banks.”

Russia’s exposure to the banking crisis sent shares of the Market Vectors Russia ETF (RSX) into the red. According to a recent tally by the central bank, Russians are believed to account for the majority of the 19 billion euros of foreign money held in Cypriot banks.

The RSX, the largest Russia ETF by assets, is down nearly 5% over the past week and 7.6% since the beginning of the year as investors pulled more than $259.46 million from the fund according to Index Universe. The fund’s top holdings are OAO Lukoil, Sberbank of Russia and OAO Gazprom.  

And Russian ETFs are not the only funds suffering from trouble in Cyprus. Shares of the Global X FTSE Greece 20 ETF (GREK), an exchange-traded fund that tracks 20 companies on the Athens Stock Exchange, fell more than 15% over the past two weeks. Greece is Cyprus’ third largest export partner, accounting for 9.2% of goods, and its second largest provider, accounting for 9.3% of goods, according to the Cypriot Embassy.  

So what’s the best alternative?  Pursche says investors should avoid Europe’s troubles by playing Japan.  

“Japan just started their quantitative easing. The market is still 10% below pre-crisis levels so there’s great fundamental value,” said Pursche. “EWJ is the widest basket and very inexpensive. It will give you broad exposure to large-cap Japanese stocks.”

The iShares MSCI Japan Index (EWJ) has large holdings in export-oriented automakers and industrial companies. The fund’s top holdings are Toyota (TM), Mitsubishi and Honda (HMC).

“If you’re a growth-oriented investor and you’re asking yourself where to commit cash for the next 3, 6 or 9 months, Japan needs to be part of the story,” said Pursche.