Stocks will have 'real problems' if Trump loses the presidency, says legendary investor Mark Mobius
- Legendary investor
Mark Mobiustold Bloomberg on Friday that stocks in the US and globally will have "real problems" if Donald Trump loses the presidency this week.
- When asked by Bloomberg's Guy Johnson if the US stock market is sustainable at its current high valuation, Mobius said: "I think it is, and this is not a political statement. I'm just stating the fact— if Trump gets in, then it's sustainable. If not, then we have real problems."
- Mobius also said that Joe Biden's proposed tax increases will be bad for US
marketsand for countries in Asia, particularly ones like China, Korea, and Taiwan that export heavily to the US.
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Legendary investor Mark Mobius told Bloomberg on Friday that stocks in the US and globally could suffer if Donald Trump does not win reelection this week.
When asked by Bloomberg's Guy Johnson if the US stock market is sustainable at its current high valuation, Mobius said: "I think it is, and this is not a political statement. I'm just stating the fact— if Trump gets in, then it's sustainable. If not, then we have real problems."
Despite the S&P 500's sell-off this week, the benchmark index has still returned roughly 6% over the last 12 months, and rallied off its March lows faster than other international indexes.
But the founding partner of Mobius Capital Partners reiterated what he told CNBC earlier in the week: he sees a "double-top" beginning to form in the S&P 500. The technical term is a bearish reversal pattern that can result in an asset taking a large dive downwards after hitting two peaks.
Mobius said on Tuesday that investors around the world are eagerly waiting for the US election results, as "they know a downturn in the US market will affect everybody."
Read more: An unusual wrinkle in Wall Street's fear gauge is warning that the upcoming election could trigger a prolonged period of stock-market chaos — one that's much worse than the aftermath of 2016
He also told Bloomberg that Joe Biden's proposed tax increases will be bad for US markets and countries that export goods to the US like China, South Korea, and Taiwan.
"A lot depends on what Biden does, if he follows through on the policy to increase taxes in many areas of the US, particularly for the middle class, that would be bad for the US market," the investor said. "That means US imports will suffer, and that of course will impact these Asian countries that do a lot of exports."
He added that a Joe Biden victory could help markets in Asia over a longer term period, but not if the US economy slows down.
"A slow US economy can't be good for these countries, so this is something we have to watch carefully," said Mobius. "Of course the global market is expanding, and that will take some of the slack, but nothing can beat the size of the US market."
The investor added: "With interest rates the way they are, stocks can continue to move ahead the way they've done over the last few years. I look at some of these stocks and you see they've increased, it's just incredible."
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