The current weakness in Russia is the big question hanging over emerging markets, fund manager Mark Mobius said on Friday.
The executive chairman of Franklin Templeton Investments' emerging markets group said he expects further aggression in Ukraine from President Vladimir Putin, which could lead to further sanctions on Russia, impacting the economies of neighboring countries.
"The word that we get is that it will probably get worse before it gets better, because there's no stopping Russia from moving further from where they are now," Mobius said on CNBC's "Squawk Box."
Russia will likely seek to consolidate its gains in Ukraine and potentially carve out some more territory, Mobius said. It will continue on that path until it sees a good reason to reverse course, he said, but nothing has emerged to make it do so yet.
Crimea joined the Russian Federation in 2014 after a referendum there showed support for splitting from Ukraine, though Western countries called the vote flawed. Pro-Russian rebels who control parts of Ukraine's east have been locked in battle with Ukrainian troops for a year.
Europe and the United Sates have responded with targeted economic sanctions on Russia.
The situation is putting Baltic states on alert, Mobius said. These countries are worried not only because Russia supplies much of the region's gas supply, but because the situation threatens "fairly good" trade with Russia, he added.
Mobius said the upside in Europe is the weakening of the euro, which will allow some countries to shift trade to other parts of the world. The European Central Bank recently embarked on a massive bond-buying program in order to stimulate Europe's economy.
"I'm in Hong Kong and there are people lined up buying luxury goods because prices have fallen in Hong Kong dollar terms because of the weak euro," he said.