Good Day!

I am Choon Kit 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.

Global economy looks uncertain recently with the increased risk of contagion in the European debt crisis.

Our view is that the macro risks and world’s economic events will collectively set to dampen the economic growth and we foresee that it will bring much volatility in the stock market until the fundamental macroeconomic problem can be fully resolved.

So what can you look out for in the current economic climate with regards to your equity investment? In this volatile market, you can look to increase your equity weights by investing in high yield stocks preferably those from emerging markets. Emerging markets are favored because of their solid fiscal strength and much controlled policy stimulus which provides a more attractive risk reward ratio than the other regional market. Interest rates on government bonds and other safe havens have hit their historical lows, and thus this is a good time to look into high yield stocks to regain your exposure while cushioning your risks in this volatile market.

You may also want to take opportunity to gradually pick up high quality stocks in the recent plunge in the equity market. The valuation levels for some high quality stocks are attractive and cheap in relative and absolute values. It is the best time to pick good quality stocks where its asset valuation is below its fair value.

Investors are advised to be cautious when doing investments and should always practise stringent risk management.

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