January tends to be a strong month in terms of industry performance – the EuroHedge Composite Index has started the year with a monthly loss only twice since its 1998 inception. But even if it was not unusual, last month’s composite gain of 0.9% must rank as one of the most important on record.

Following a nightmare final quarter for much of the industry – during which the Composite lost more than 3% – a turnaround was overdue. It came as markets rebounded from their December slide, highlighting the importance of holding your nerve and staying true to your convictions. Funds that kept risk on the table after losses in December were rewarded in January.

Dave Fishwick’s Episode fund epitomised the reversal in fortunes. After a 6.6% loss in 2018, the $3.6bn fund’s biggest since the financial crisis in 2008, it rose 6.7% in January. The gain stemmed mainly from Fishwick’s “extremely uncomfortable and frightening decision” to extend long equity positions in December, as stock markets were plunging.

Investors hope better returns in January can set the tone for the year ahead. Emerging markets funds will be especially bullish after leading the performance charts with median gains of 3.6% in EM equity and 2.9% in EM debt funds last month.

As the Brexit negotiations roll on in Europe, we turn our attention further afield this month to a range of emerging markets flashpoints. It is set to be a big year for EM, with elections in India, South Africa and Nigeria. A series of big questions continue to divert global investors: how will the Venezuela crisis conclude? How much will China slow down? Will the Brazilian turnaround last?

The recent comments of Federal Reserve chief Jerome Powell, indicating a more patient approach to central bank tightening in the US, intensified the EM spotlight. His comments could boost emerging markets economies holding dollar-denominated debt, but managers doubt the move’s long-term implications.

We explore all these issues this month, rounding up a series of views on Venezuela and China, and speaking to former Eton Park partner Edward Misrahi, who won big in Brazil last year, on the outlook for Latin America’s biggest economy.

Winners at last month’s EuroHedge Awards give us their views on a range of market and industry themes. Most agree the January surge in equities will not last. Sanditon Asset Management’s Rupert Tyer said it was a “fantastic opportunity to re-short risk assets (basically growth and cyclicals) after the December collapse and rally.”

Consensus also surrounds the continuing impact of central bank policy on markets in 2019, despite a move away from quantitative easing. The debate and, for many, confusion sparked by Powell’s comments on tightening could set the tone for the year. “Financial markets in 2019 will stay highly political with a high degree of central bank policy noise,” say Giuseppe Manieri and Patrick Quensel of Premium Currencies.

It certainly won’t be dull for managers currently focused on extending this year’s early gains.

Editor’s letter: Emerging markets catch eye in 2019 on EuroHedge.