Corporate earnings in the United States, Europe, and Japan will weaken and stock market volatility will increase, according to a majority of investment professionals surveyed in New York, London, Melbourne, and Tokyo by AXA Rosenberg in October and November.

Respondents also showed particular wariness of the U.S. equity markets and a belief that Japan’s equity market was the most undervalued.

AXA Rosenberg, an AXA Investment Managers company specializing in quantitative active global equity asset management, polled 196 investment professionals, including institutional pension fund sponsors, consultants, and other financial professionals, across the U.S., Europe, Australia and Japan, representing over US$4 trillion in assets under management, as part of a series of client conferences.

Commenting on the findings, Stephane Prunet, AXA Rosenberg global chief executive officer said, “If predictions for a challenging economic environment and continued heightened volatility come to pass, investors who refocus their attention on stocks with sound fundamentals and portfolio risk control are likely to be rewarded. We also expect that growing interest in innovative equity products that help navigate this volatility will continue well beyond 2008.”

Prunet continued, “We were struck by the degree of similarity in opinions about which economies, markets, and currencies will be the strongest and weakest across the globe. Not 100% agreement, but enough to suggest that we really do live in a globally interconnected economy.”

Respondents in the U.S., United Kingdom, and Japan expected lower corporate earnings in their own markets over the next 12 months (60%, 55%, and 50% respectively).

In contrast, respondents in Australia expected higher corporate earnings (76%).

Respondents across all regions rated Asia ex-Japan as the region that will have the strongest growth in corporate earnings (65%, 64%, 59%, 87%).

Respondents in the UK, Australia and Japan chose the U.S. as the region that will have the weakest growth in corporate earnings (71%, 54%, 71%).

Respondents in all regions predicted that equity market volatility will be higher in the next 12 months, as well, respondents in all regions saw inflation increasing in the next 12 months.

Similarly, the outlook for interest rates in all regions was for higher rates.

All respondendts were very bearish on the U.S. dollar , while all were bullish on the euro and yen.

The surveys were conducted at AXA Rosenberg’s series of conferences in October and November hosted in four locations — New York, London, Tokyo and Melbourne.