The Chilean, who has only one year on his current deal with the Gunners, has been strongly linked with a summer exit from the North London side.
Mustafi said: "Of course I hope he stays. It would be a pity to lose him.
"Alexis is an exceptional player — for me one of the best in world football. I have experienced few players who are as hungry as him. He is nimble, agile, but despite his size very sturdy, and can dribble past players. Alexis is a complete player.
"As soon as he is on the ball, everyone knows: something can happen. Once he has made his way to the front of the goal, you will not be able to take the ball.
"He can slow down at full speed and hit a hooked shot - you never know what to plan next minute.
"It is definitely advisable not to allow a one-on-one situation, but to play against him with cover."