CNBC reports that UBS Global Wealth Management sees 5% to 10% upside for global stock markets, with emerging markets, financials, energy stocks and small caps best placed to capitalize.

U.K. CIO Caroline Simmons said analysts had a particular preference for emerging markets in Asia and China in particular. She also backed cyclical and value stocks.

This is based on expectations that the economic recovery will broaden out and accelerate over the course of the year, continuing to support a rotation from the high-flying growth sectors such as technology into sectors that benefit from an acceleration of industrial production and rising inflation.

She noted that financials had underperformed the S&P 500 by around 5% since the end of 2019, but have recently begun to make a comeback as the rotation to value and inflation expectations gathered pace.

A recent rise in the benchmark U.S. 10-year Treasury yield and other bond yields around the world have triggered volatility in equity markets, as investors began to question the valuations of growth-based sectors susceptible to higher interest rates.

The 10-year yield was hovering at around 1.6209% on Thursday morning in Europe, but UBS forecasts that it will reach around 2% by the end of the year.

“Higher yields and steeper yield curves generally are more helpful for financials. They help their net interest margins and they also generally see an improvement in non-performing loans,” Simmons said.