INVESTORS should take a cautious stand on Australian markets, suggests Bank Julius Baer in its latest investment report. Markets Down Under seem to have concluded that ''traffic lights for Australia's financial markets have turned from green to amber after a fine run'' says the Swiss private bank, which specialises in international fixed income management. In line with the report's assessment, Mr Harry Cheung, the bank's chief representative in the Asian region, advised Hongkong investors to take their profits on Australian dollar bonds. The report says the Australian dollar also looks expensive, especially as much of the rally may have been driven by offshore bond investors. It says the equity market has rallied strongly. ''Unlike the bond and currency markets, equities may still be attractive,'' says the report. ''However, whether the equity market can make progress in spite of corrections in the Australian dollar and bond yields is questionable.'' The report says analysts expect the unemployment rate to move up to 11 per cent or 11.1 per cent. Mr Cheung said: ''Australia's economy is shackled by a generous welfare state inadequately financed by punitive high taxes and excessive government intervention.'' ''This detrimental economic framework is alien to Australia's more successful Asian neighbours.'' IT IS generally recognised that over a long period of time equities outperform money market instruments and it is therefore possible to combine cash assets, selective equities and debt instruments to achieve a good medium-term capital appreciation without risking the initial invested amount.. That is why Banque Nationale de Paris (BNP) has introduced a new service to Hongkong: BNP Guarantee Plus. This is managed by BNP Hongkong Fund Management Team on a discretionary basis. So without being an expert in international financial markets, investors may take advantage of the more volatile, high yielding financial instruments (such as international debt and equities) without being exposed to the inherent risks that may result in capital loss.