I am Yuan Chao from Phillip CFD. Today I will share with you on the global economic outlook and what to look out for in the equity markets given the uncertainty and volatility in recent markets due the heighten European sovereign debt crisis.

In the past month, we have seen the focus of the two year old European sovereign debt crisis shifting from Greece to Italy, the third largest economy in the Eurozone sending the global financial markets into a state of frenzy.

Global financial markets did however, receive a much needed reprieve on Wednesday, when the Federal Reserve, along with five other central banks including the European Central Bank and the Central Bank of Canada, announced a joint action to boost liquidity and support the global economy.

While the concerted action by central banks comes as a much welcomed move, it is not the game changer to the debt crisis plaguing Europe. We believe that the only sustainable solution to the euro crisis is that the Eurozone adopts a fiscal union. However, this can only achieved by making changes to the EU treaty.

All eyes therefore, will now be on the EU summit on 9th December when EU leaders meet to draw out a response to the debt crisis, especially when the meetings between European finance ministers earlier this week ended without yielding anything concrete. Failure by EU nations to meet market expectations by backing proposals for much closer coordination of their spending and budget policies changes, could mean that the Eurozone faces the prospect of an the unappetizing breakup that could spark chaos around the global economy.

In view of the increased volatility of the global financial markets, where should investors look for investment opportunities and how should they protect their portfolio?

Due the recent selloff in the equities market, many high quality stocks are currently trading in oversold territory. For investors who are looking for trading opportunities in such volatile market conditions, you may want to take the opportunity to buy what are considered oversold ‘bargains’, which are trading below their fair value and hold them for the long term.

While for those who are looking to protect your investments from downside risk in turbulent times, you might want to consider using Contracts for Difference (CFD) to hedge your stock positions against any short term risks. As CFDs are traded on margin, a big movement in a relatively large long term holding can be covered with a far smaller deposit outlay in a CFD.

Investors are advised to be cautious when carrying out any investment and should always practice stringent risk management.

That is all I have for today for this week’s market watch. Thank you for staying with us.