A Russian debt default could spill over into emerging markets including China, according to Yale economist Stephen Roach
- Famed economist Stephen Roach told CNBC on Sunday a
Russiandebt default would reverberate across emerging markets.
- Roach also said China would not be immune if
Russia's first major sovereign default in over 100 years happened.
Economist Stephen Roach said a Russian
"If Russia does default on its debt...there will be broad spillover effects to sovereign debt in emerging markets around the world and China will not be unscathed from that," he told "Squawk Box Asia" on Sunday.
Roach, who was chief economist at Morgan Stanley for
On Sunday Moody's downgraded Russia's credit rating to CA – one notch above "default" – after it downgraded it to junk status on Thursday last week.
Reuters reported on Sunday that Russia had said sovereign bond payments would depend on Western sanctions and some dollar bond payments could be made in rubles, raising the prospect of the country's first major foreign bond default in over 100 years.
Roach went on to say that China couldn't afford to remain close to Russia as it continues to bombard Ukraine.
"China cannot afford to stay in close alignment with Russia as it mounts this truly God-awful campaign against innocent Ukraine right now," Roach said.
"The sooner China breaks with Russia, the better — and we'll have to wait and see and watch that very closely," he added.
Global stocks tumbled on Monday, after oil soared above $130 a barrel, as Western powers raised the possibility of banning Russian energy exports. Major companies continue to leave the country and continued uncertainty is driving investors into safe havens like gold.
US Secretary of State Antony Blinken told NBC's on Sunday that the US and its European allies were in discussions over a ban of Russian oil exports.
Elsewhere the global index providers MSCI and FTSE Russell cut Russian stocks from their indexes last week, with MSCI saying that the country's stocks are "uninvestable".
- People want bigger homes and reopening offices, schools hasn’t altered this trend
- Prime Minister Modi says extension of free ration scheme will benefit crores during the festive season
- Central government employees given 4% hike in DA ahead of Diwali
- Jewellery chains are growing at the cost of standalone jewellers – and it’s only going to get worse, says World Gold Council report
- To beat the traffic of Bangalore, you can now book a 12-minute helicopter ride