Equity markets have had a strong start to 2019, more than reversing their collapse through much of December. At our latest investment forum, our panellists discussed and debated how likely it is that this 'risk-on' period would be sustained through 2019.

Four key themes emerged from the forum:

Risk assets should continue to perform well for now

For as long as central banks maintain their new patient tone, and global growth stabilises, the positive risk sentiment that markets have enjoyed to date in 2019 should be sustained. However, geo-political developments through 2019 still hold the power to upset equities and unleash a renewed risk-off vibe.

Australia remains at risk of a credit tightening-induced downturn

Data reveal a sharper-than-expected slowing in domestic activity. The risk that renewed interest rate cuts will be needed has increased, supporting domestic fixed income assets. Investors should avoid the most exposed equity sectors and seek defensive earnings on less demanding multiples.

Emerging markets (on a selective basis) remain attractive

Emerging markets are no longer viewed as cheap. However, for a number of reasons, they are still seen as an attractive place to invest. These reasons include an on-hold US central bank, capital flows, relative valuation and potential currency gains.

An ongoing cautious attitude to risk is warranted

The world is in the later stages of the macro cycle, and more modest returns and elevated volatility are likely to persist. Sustained low interest rates and an associated build-up in debt remain a vulnerability. Geo-political flashpoints and an unlikely return of higher inflation are key threats to the recent renewed risk-on sentiment.