“All the indicators” point to a looming 30% fall in the S&P 500 and the Dow Jones Industrial Average, Mark Mobius tells Financial News. Such a correction would pretty much wipe out the gains of the last two years. “When consumer confidence is at an all-time high, as it is in the US, that is not a good sign.” All we need is a trigger for the crash, which could be anything from “a natural disaster” to “war with North Korea”, says Mobius. Any fall would be amplified by the growing use of exchange-traded funds (ETFs), which now account for nearly half of all trading in US stocks. It is possible, admits Mobius, that if US president Donald Trump’s policies “pay off then markets could move higher, but things are just looking so ‘toppy’”.
That said, trade friction between the US and China shouldn’t unduly hit global growth, Mobius told CNBC. There are at least “a few innings left” for the current boom, although the situation varies from country to country: Russia has been hard-hit by sanctions and Brazil is still mired in a political corruption scandal. The economy in Chile, on the other hand, “looks great” and Argentina also continues to be strong under President Mauricio Macri (pictured). But Mobius is most positive about China (where cancer treatment research is “way ahead” of anywhere else, he says) and India, which by 2050 will have a bigger population than China.