It's not only the football World Cup that will provide sharp ups and downs this summer -- markets are likely to give investors a similarly intense roller-coaster ride, argue fund executives and analysts.

For one thing, Spain's debt problems seem to be worsening -- as funding problems grow for the country's companies and banks -- and several market participants recommend a wait-and-see approach before piling into Asian stocks again. Especially as there appears little chance of Asia-Pacific markets being insulated from Europe's woes.

Sandro Antonucci, Geneva-based vice-president of fund selection and a member of the marketing products and solutions team at Lombard Odier, warns we should expect a hot few months. "Developed and emerging markets will remain less directional and are likely to range-trade with a lot of volatility," he says. "We see this until at least the end of July and possibly till the end of summer."

Others take a similar view. "Over the summer, I see things being driven by general macro volatility and sovereign newsflow rather than by business fundamentals," says Chris Hart, US-based portfolio manager of Robeco Boston Partners' Global Value Fund, which has Asia exposure.

He also sees the global markets as being "very binary" at present, in the sense that there are some huge potential moves up or down, depending on market events. For example, many believe China is overheating and may crash in one way or another, certain European sovereigns look in danger of default, and there are questions over the long-term viability of the euro.

As a result, Hart says his portfolio has avoided exposure to Spain and Asia ex-Japan, "as our investment process highlighted poor risk/reward opportunities". "Nevertheless, as the markets have re-rated, we see opportunities emerging, especially in Asia-ex Japan markets due to favourable valuations combined with continued business momentum," he adds.

Antonucci also recommends caution and being selective as a result of the Spanish problems. "The question is always the timing," he adds. "Typically we see the market globally rising again, and we know that, in July, Spain has to come up with some solution. If it comes up with a bad one, the market will react very negatively.

"Even if you think the market will go up massively from now until July, perhaps it's not a good time to buy, because you can be sure that if there is a problem in the market, there will be massive redemptions," he says. "If you feel the markets globally will rise now, perhaps wait until mid-July until you know the outcome in Spain before taking an investment decision."

Hence, Antonucci suggests those with a lot of equity exposure may want to think about reducing it. He says a good approach may be to have a high proportion of fixed income and a low proportion of high-alpha-generating equity. "You should be very aggressive with the equity pocket; you should create alpha with this pocket," he says.

Some are more bearish. Emil Wolter, head of Asian regional equity strategy at RBS, says in a June 9 report: "Following on from tighter liquidity, the rising cost of capital and concerns about the severity of Europe's financial difficulties, worries over global economic growth have started to impact investor behaviour. We think Europe is facing a crisis and that the chance of a global double-dip has increased substantially."

As a result, Wolter sees a 14% downside risk for Asian shares. "We see no scope for Asian financial markets to de-couple and suggest investors wait until valuations are at least 1 standard deviation cheap to bottom-fish," he says. "If a double-dip does occur, however, this might prove premature, and the downside risk could be 25-30%."