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At a recent panel discussion held at Fidelity's London offices, Stewart Cowley, the head of fixed income at Old Mutual Asset Management (OMAM) who described himself at the 2011 Morningstar Investment Conference in London as "a bond manager who currently doesn’t like bonds," offered European equities as his "top tip" for 2012.

Cowley was echoing comments from Cazenove's Chris Rice, who when pushed to narrow his predictions for 2012 European equity performances down to one scenario, said his money would be on a 15 per cent increase in European equity markets next year.

European equities: the ones to watch in 2012?

It's that time of year again: a time when the world's asset managers proffer their hopes and fears for the year ahead. This year, however, rather than confidently placing their bets on particular assets, regions or sectors, asset managers are instead forced to talk of "scenarios" - ranges of potential outcomes rather than absolutes. We all know only too well the pain and brief jubilations that the world's equity markets have endured in 2011.

Yet there's still no sign of light at the end of the tunnel and global equity markets are set to continue their rollercoaster ride in the face of such huge uncertainties as the future of the eurozone, the lack of US cohesion regarding deficit-reduction plans, and a forecast soft landing for the Chinese economy.

In such an investing environment, Cowley, who manages 546 million pounds in the OMAM Global Strategic Bond Fund, Rice, who is responsible for pan-European equity strategy portfolio construction at Cazenove Capital and manages 920 million pounds ($1.4 billion/1.1 billion euros) in assets in the Cazenove European fund, and Trevor Greetham, asset allocation director at Fidelity Worldwide Investment whose Multi Asset Strategic Fund manages 586 million pounds, were loath to be pinned down to specific forecasts when participating in a recent panel discussion hosted at Fidelity's London offices.

However, the bond, equity and multi-asset managers, respectively, broadly agreed that given current valuations, European equities could be the ones to watch for 2012.

While Cowley picked European equities as his top tip for 2012 and Rice predicted a 15 per cent rise in European markets next year, the latter's forecast came with the caveat that the alternative could well be a drop of 20 per cent, depending on the outcome of the eurozone sovereign debt crisis. Given such a broad range of outcomes, Greetham made a point of repeatedly highlighting the importance of diversification and multi-asset strategies to prepare for all eventualities.

Where in Europe?

Of course, the three managers mentioned so far aren't the only ones looking at European equities. In a recent global equity strategy research note from Citigroup, the investment bank's analysts said they still believe that investors may be too sanguine on some of the issues facing Europe and they would wait for a policy response rather than second-guess politicians. However, they added that while they currently remain underweight on continental European equities, they see particular opportunity in Italy and Germany.