Finding opportunities in key risks to global stock markets

GLOBAL stock markets might be on the edge of a cliff. Here are 20 key risks that could trigger a sharp drop in share prices worldwide, which will also create opportunities:

Of course, the government and the European Central Bank will try to control and save the situation. But even the approval of a 20 billion Euro fund to rescue Banca Monte dei Paschi di Siena SpA and other troubled lenders would not help much. We thus might witness Italy's biggest nationalisation since the 1930s if the government takes Monte dei Paschi into public ownership. About 360 billion euros of bad loans might easily turn into much a greater number if things start to go wrong.

If we look at the Shiller P/E, then we are soon reaching the same point that markets reached before the Black Tuesday in October 1929 and we are much higher than we were before the Black Monday in 1987, when the Dow Jones lost more than 22 per cent of its value in one day.