HEAVY plunges in stock markets across Asia have encouraged investors to try to dig up treasures in European equities. These are expected to offer huge potential as the continent moves towards a single currency. Edmund Lacis, director of wholesale business, Fidelity Investments, said compared with the lacklustre performance in Asian bourses, European markets recorded impressive returns last year. He reckoned German equities had increased 41 per cent in deutschemark terms and 21 per cent in US dollar terms, despite the easing of the mark against the greenback. Britain's equity market also grew 22 per cent in sterling terms and 17.8 per cent in US dollar terms. Also calculated based on the greenback, the Danish bourse surged 34 per cent, the Netherlands 24 per cent and Switzerland 38.6 per cent. Mr Lacis expected this trend of high growth to continue because of the change of European companies' style of managing investor relations and the growth prospect offered by the forthcoming single currency and single market. He said in recent years European companies had improved substantially the way they managed their businesses in a bid to enhance shareholders' value by cutting costs and restructuring their operations. The improvement suggests that continental counters were becoming more transparent with shareholders being treated with respect. This helped increase their appeal to foreign investors. It will be followed by an increased inflow of foreign funds into the shares, pushing prices up. Another major growth prospect is possible consolidation in the main industries when the continent becomes a single market. A wave of mergers and acquisitions among European companies had also taken place last year, with interests of weaker players being snapped up by their stronger peers. An accurate indication of this was recorded on October 13 with a total of $87 billion in mergers completed within a single day. Mr Lacis said Fidelity would continue to choose companies which were hot acquisition targets, accumulating the shares when prices were still low, and selling for profit when prices increased on announcement of the potential acquisitions. The move towards a single market in the European Community also provided tremendous opportunities for companies to increase their cross-border trading and export of goods and services. 'When the whole of Europe becomes a single market, 60 per cent of the existing cross-border trade will become domestic,' he said. Mr Lacis said Fidelity would try to pick companies with a high potential of becoming stronger and more efficient players by taking advantage of the increased cross-border trading opportunities. He saw good share price appreciation potential for banks in Nordic countries, including Sweden and Finland, which were being traded at relatively cheap price-to- earnings multiples of seven to eight times. Fidelity forecast France and Germany as countries among its neighbours with the highest economic growth of 2.9 per cent this year, compared with Italy's 2.2 per cent, Britain's 2.5 per cent and the United States 2.6 per cent.