Mark Mobius, co-founder of Mobius Capital Partners.
Anjali Sundara | CNBC
Stock markets in the U.S. will go “haywire” if President Donald Trump fails to win a second term in the White House, prominent investor Mark Mobius predicted on Thursday.
Mobius, co-founder of Mobius Capital Partners, said U.S. markets have continued to climb higher partly because of Trump’s policies. The president made several moves that many considered pro-business since he took office in 2017, such as slashing corporate tax rates.
The S&P 500 and the Dow Jones Industrial Average have gone up by more than 30% since the beginning of 2017, while the Nasdaq Composite has risen by around 45%. Such optimism in the stock markets could be disrupted if Trump loses in next year’s presidential race, the investor said.
“I think the markets then will go haywire because they’ve been depending on Trump policies to keep on pushing the market up and also higher growth rate in the U.S.,” Mobius told CNBC’s “Street Signs.”
He added that for now, “it doesn’t look likely” that Trump will lose. However, sentiment in the media appeared to be “overwhelmingly” against the president — and that could continue to build until the election next year, he explained.
“That’s why I’m a little concerned about this,” he said.
Mobius’ portfolio
The run-up in U.S. stocks mean that prices may already be peaking, said the investor. Economies in Europe and Japan look like they’re “going nowhere,” so Mobius said he doesn’t see a lot of investment opportunities in the major developed markets.
Mobius said companies in emerging markets pay higher yields than those in developed economies. And the latest rate cut by the U.S. Federal Reserve adds another reason to invest in emerging markets. Lower interest rates are typically bad for the U.S. dollar, and that’s good for currencies in emerging markets.
“The search for yield is the name of the game,” he said. “So, emerging markets have an opportunity here not only because of the rate cut but because their companies are paying pretty good yields.”
China and India account for around 40% of Mobius’ portfolio, the investor said. The remainder is spread across Brazil, Turkey, South Korea, Taiwan and Southeast Asia, he indicated.
Mobius said he likes companies that will benefit from rising consumer incomes in China. In India, the investor said, he’s scouting for opportunities to invest in small- and medium-sized companies.
