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."
Mr. 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 percent agreement, but enough to suggest that we really do live in a globally interconnected economy."
Respondents in each region provided views on their own economies and markets. Among the detailed findings of the AXA Rosenberg survey were:
Outlook for corporate earnings
- Respondents in the US, UK, 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 US as the region that will have the weakest growth in corporate earnings (71%, 54%, 71%).
Regional outlook for the economy and equity markets
- US respondents indicated that the US is late in their economic cycle (67%), projected weaker economic growth (65%), and characterized their equity market as overvalued (43%).
- UK respondents thought that they are more in the middle of the economic cycle (48%), though also projected weak economic growth (60%). However they rated their equity market fairly valued (55%).
- Australian respondents, in contrast, thought that they are earlier in the economic cycle (with 69% saying early to mid), and hence projected stronger economic growth (38%), yet also identified their equity market as overvalued (41%).
- Tokyo respondents believed that they are in the mid to late phase of the economic cycle (38% and 38%), projected economic growth that was modest (33%) to weaker (37%), and classified their equity markets as highly undervalued (75%).
- Respondents in all regions predicted that equity market volatility will be higher in the next 12 months (67%, 45%, 75%, 58%).
Regional outlook for inflation, interest rates, and currencies over the next 12 months
- Respondents in all regions saw inflation increasing in the next 12 months (57%, 60%, 84%, 50%).
- Similarly, the outlook for interest rates in all regions was for higher rates (44%, 52%, 87%, 55%).
- All were very bearish on the US Dollar (87%, 85%, 76%, 77%).
- All were bullish on the Euro and Yen. (91%, 79%, 73%, 90% of investors in the four regions chose either the Euro or Yen as the strongest.)
