U.S. stock markets will go “haywire” if President Donald Trump isn’t elected for a second term, Mobius Capital Partners co-founder Mark Mobius predicted Thursday.

Mobius said the reason markets have been able to climb to recent record highs is in part due to Trump’s business-friendly policies, including slashing the corporate tax rates as part of the Tax Cuts and Jobs Act passed in December of 2017. Since the start of 2017, the S&P 500 and Dow Jones Industrial average have each climbed about 30%, while the Nasdaq has shot up about 45%.

Market optimism would crater if Trump loses next year’s race, Mobius said on CNBC’s “Street Signs.”

“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 said.

For now, he said, “it doesn’t look likely” that Trump will lose, even with mainstream media sentiment “overwhelmingly” against Trump — which will only continue to build heading into the election cycle, he said.

“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, TurkeySouth KoreaTaiwan 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.