The death of an 88-year-old man wouldn’t normally wipe 3.6% off a country’s stockmarket. But the world’s longest-reigning monarch, King Bhumibol Adulyadej of Thailand, was a unifying figure in a divided country. And with the succession uncertain, tension could flare up again.
Thailand has “gone from one crisis to another” recently, says Capital Economics. There have been two coups in ten years, the most recent in 2014. The context is a bitter divide between a poor rural population and an urban elite. The country is currently under military rule, a new constitution has just passed through parliament and a general election has been promised for 2017.
Given that the king’s presence may well have helped avert civil war on several occasions, his death could deepen the political divide and knock a post-coup recovery off course. Tourism, which comprises 10% of GDP, would be damaged, while there is little prospect of other sectors picking up the slack. The relatively subdued global environment precludes a boost for exports, which tend to be concentrated in slow-growing industries anyway.
High consumer debt – 80% of GDP – militates against a rise in household spending. Business spending is subdued in any case, owing to chronic instability: investment growth has averaged a measly 3% over the past decade. Now it could fall further. To cap it all, stocks have looked expensive of late. Don’t expect a major bull run anytime soon.