Nervous about risky assets, says Societe Generale

Global markets have been volatile over the last few days. Benoit Anne, Societe Generale is very nervous about risky assets. "At this point, the bad news can come from several directions. So, you have got to keep watching your screens and be prepared for the worst. Greece is back to the picture. The problem with Greece is the financial programme," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Gautam Broker and Ekta Batra. Q: What is the near-term scenario looking like? Will the market be able to course through the Spanish bond auctions without any major damage? A: That is going to be a big focus this morning. But ahead of that, the risk of sentiment continues to prevail. There is bit of stability this morning, but overall the trend has become very clear. The financial stress has picked up quite a bit over the last couple of days. Spanish bond auctions will be a key to watch. But I am a bit nervous about the backdrop. Q: With regards to Spanish yields despite being closer to 7.5% and we have heard time and again that over 7% is the danger mark where countries get into this bailout process, do you think market is ignoring it? Despite that, Europe is in the green now, what is the feeling on Spanish yields? A: This is clearly unsustainable level for Spain and it is not a good sign at all. From global markets perspective, we are exposed to high headline risk there. You have seen over the weekend that some of the regions in Spain are now in severe financial stress and have had some support from central government. We could face the risk of more of those pieces of news. There is always risk that Spain itself faces serious trouble. From a global market perspective, the backdrop is really not supportive. We are seeing bit of stabilisation of those yields, but they have stabilised at unsustainable level for Spain. For me, as emerging market strategist, I keep watching those yields. I am very nervous about risky assets overall. Q: What would be any major events you may out for? Yesterday, we even heard once again the dreaded talk of a Greek exit with the Troika descending on Greece. What would be the major events that are lined up and that we have to watch out for? A: At this point, the bad news can come from several directions. So, you have got to keep watching your screens and be prepared for the worst. Greece is back to the picture. The problem with Greece is the financial programme. We know probably by now that financially the programme has gone off track. They were busy holding their elections and the performance under the programme has probably slipped during that period. So, when we are going to sit down again now, the experts are going to probably realise that more cash is needed. That in itself is going to be a risk for global markets.