THE outlook for world equities remains favourable so investors should look to be just about fully invested, according to Schroder Investment Management (Hong Kong). Managing director Richard Haw said investors looking to capture the best returns should have a heavier weighting in European and British stocks. He said those wishing to gain Asian exposure would be best placed sticking to the relatively stable markets of Hong Kong and Taiwan. 'It is still the case that equities over any reasonable length of time will tend to get you a better return but in a more volatile way, year to year,' Mr Haw said. 'The returns from equities have been excellent from the major markets for the past 10 or so years and, with inflation remaining subdued, that may well continue.' Investors looking to enter the markets should consider European stocks because of strong economic conditions and the potential for further positive restructuring. 'The main emphasis should be on continental Europe and Britain because of the supportive overall economic background and the potential for better earnings,' he said. 'Continental Europe is still far behind the US cycle in terms of squeezing improvement out of the current operating environment.' Mr Haw said the march towards European Monetary Union in many countries was also a major positive for stocks as it required governments to follow disciplined economic guidelines. He said the managements of European companies were also playing a role in the strong equity markets by becoming more focused on the tenets of maximising shareholder value. Some of the continental markets were already up 20 per cent this year, but further good performance was likely. He said: 'You could expect a further 10-15 per cent rise through the rest of this year and, if you can get your stocks right, you could do substantially better than that.' Mr Haw said Asian markets were a mixed bag with stocks in countries such as Japan looking shaky because of the government's failure to address underlying structural problems. Investors interested in buying Asian stocks would be better to aim at the greater China markets of Hong Kong, Taiwan and the mainland. He said: 'Our view this year is that the greater China bunch of countries are in a better situation than Southeast Asia.'