Emerging markets guru Mark Mobius says that emerging markets remain attractive, though inflation and sovereign debt are  two factors that could impact global growth.

“The rise in emerging market equity prices has been substantiated by a correspondingly large increase in the earnings growth of emerging market companies,” Mobius, executive chairman of Templeton Asset Management, said on his blog. (Thanks to Business Inside for highlighting his commentary.) “While there may be cases where stock prices have run ahead of fundamentals, our analysis leads us to believe that on average, prices are in the middle of their historical range.”

Mobius says food inflation is a big issue that is impacting his investing outlook. “In general the commodities space continues to be attractive to us. Food prices have gone up and are likely to stay up for some time,” he says, citing bad weather, as well as increasing demand from Indian and China. “We may have to live with higher food prices unless farm productivity increases dramatically,” he says. “This is one of the reasons we are looking very closely at investments in Ukraine, a country that is famous for agriculture and its fertile ‘black earth’. Operations there are not limited to wheat, corn and other crops but also extend to dairy and meat production. Meanwhile in Brazil, we are looking at food processing businesses.”

Mobius also says Greece, Spain, Portugal, and Ireland may find it “quite difficult” to avoid defaulting on debt, though he adds that their governments are working hard to find ways to avoid “large scale problems”.