Financial experts are urging investors to keep liquidity as high as 70% and maintain a conservative portfolio of low-risk assets for the next 6-12 months because of uncertainty regarding a Covid-19 resurgence and domestic and international political events.
Channarong Meechaijareonying, a technical investment analyst at Bualuang Securities (BLS), said the probability of a second Covid-19 wave is increasing in some countries in Europe, as well as in India, the US and the Middle East, which could mean the economy may take longer to recover.
Even if a second wave is more serious than the first, he predicts Thailand cannot afford another lockdown, as the budget to compensate unemployed workers and corporations losing substantial revenue is far above the debt limit.
If a second wave does come, businesses may have to continue operations despite the risk of infections.
"If a Covid-19 vaccine is available in the first half of next year, that will restore investors' confidence in risky assets," Mr Channarong said.
Domestic political risk to investments is also increasing with ongoing student-led protests calling for constitutional reform, while a counter-protest group loyal to the government and monarchy grows in opposition. If confrontations between these two groups or the police lead to violence, investors could lose faith in the stability of the government.
Outside Thailand, the US presidential election in November could have a huge impact on the global outlook, as a victory for the opposition party could drastically impact US foreign policy, especially with regard to China.
BLS advises investors to have an overweighting of cash equivalents during these periods of intense risk and instability in the equity and bond markets for the rest of the year.
The company has a neutral outlook for global equities, gold and properties.
Gold has a narrow upside after seeing a year-to-date return of 27% and looks set to be volatile in September, with a mix of positive and negative factors.
News of a Covid-19 vaccine, improvements in economic factors, and easing slumps in the US dollar and bond yields present near-term pressure for bullion prices.
Mr Channarong advises investors to manage a conservative portfolio and recommends holding cash or money market funds with a weighting of up to 68-70%, with the rest in equity and government bonds.
The expected return for this cautious portfolio is 3%, while the moderate strategic portfolio forecast has an expected return of 4.8%.
An aggressive strategic portfolio could see a returns of 6.8% by focusing on investing in global equities with high returns.
Komsorn Prakobphol, head of economic strategy at Tisco Economic Strategy Unit, said that over the next few months the US stock market will be highly volatile amid uncertainty surrounding the election.
Statistics since 1952 show that in the few months before a presidential election, US stock markets have always traded cautiously, moving in a narrow range, Mr Komsorn said.
Initial polling shows nominee Joe Biden of the Democrat Party with a healthy lead over the incumbent, President Donald Trump -- by as much as 10% in some polls -- as many Americans fault the current president for his handling of the Covid-19 outbreak.
If Mr Biden wins the election, there may be a short-term negative effect on the stock market because of Mr Biden's proposed policy to raise the corporate tax rate from 21% to 28%, increase the capital gains tax and support corporate antitrust policies, such as a minimum tax for large tech companies like Amazon that will negatively affect the firms' profits.
A victory for Mr Biden could also lead to an upward trend in Asian stocks.
