Saudi Arabia: Dubai tourism and Saudi commodities are among the emerging market sectors that offer attractive valuations for investors, Tellimer said in a research note.

The stuttering and uneven recovery supports a mix of cheap technology, manufacturing, commodities and tourism exposure, it said.

The research group said its updated valuations suggested that smaller emerging and frontier markets offered significantly cheaper access for investors amid the latest global inflation jitters.

“In these small emerging markets, the local investor base, driven by attractive dividend yields relative to local real interest rates, remains the key flow of marginal liquidity, given the demise of most foreign funds dedicated to these markets,” said Hasnain Malik, head of equity research at Tellimer.

Saudi Arabia offers the best equity dividend yields versus local interest rates among the Gulf states with rates of 7 percent it said. The Kingdom was followed by Oman at 6.5 percent and Kuwait at 5.3 percent.

Among the larger emerging markets, Tellimer said it recommended a tilt from technology to commodities in countries that may benefit from a post-pandemic recovery such as Saudi Arabia, Russia and Brazil.

Tourist destinations like Thailand and others at deep valuation discounts versus history, such as Dubai offer recovery opportunities, for those prepared to look beyond COVID-19 disruption, it said.