So far, the West is holding fire on more damaging economic sanctions, but President Obama has warned that Russia will face "costs" if it fails to "abide by international norms"
Principal and head of options at III Associates Deep Kumar said he thinks there will be wider sanctions which will have implications for markets.
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"So far, it's been relatively mild. But I think if there is going to be wider impositions of sanctions, which I think is the program they're speaking of, in the next phase of the sanctions it would be much more severe," Kumar told CNBC at the Investor's Choice Hedge fund Awards on Tuesday, a hedge fund industry event.
"And if that were to be imposed, I think there would be implications for global growth and implications for asset market valuations or stresses, banking stresses to develop. I think all of those could start to come into play and asset markets would get hit in that situation," he added.
Kumar said he was building elements into his fund to both take advantage of and protect against the situation.
"It would be a credit stress type of environment, so we have some positions that take advantage of that," he said, adding that he thinks there will be a general move to dollars and to dollar government-related assets in particular, if further sanctions were put in place.
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The sanctions, imposed against a number of Russian officials as a response to Russia's annexation of Crimea, were drawn up by the U.S. and EU last week.