(Updating with comments from Thai prime minister, Bower Group
SINGAPORE Oct 13 Thailand is unlikely to face
major economic disruption after the death of revered King
Bhumibol Adulyadej, although many people in the country will be
grief stricken, some risk analysts and diplomats said.
The passing of the 88-year-old king, which followed a series
of major health problems in recent years, was announced by the
palace on Thursday.
Prime Minister Prayuth Chan-ocha announced that government
officials will mourn for one year and that Thai people have been
asked not to hold festivities for the next 30 days.
However, he did ask businesses and individuals to keep
investing. "On the economic side, whether it's the stock market,
trade, investment and business sector, please don't stop," he
The military government has pushed through a new
constitution that it hopes will ensure its oversight over stable
government for years to come and it looks firmly in control for
a royal transition.
The government might postpone to 2018 a general election
scheduled for next year, and Thai stocks and the baht currency
are likely to be volatile immediately after the king's death,
the Eurasia Group of risk analysts said in a report issued
before the announcement of the king's death.
But given a smooth transition, major disruption is not
expected, according to five diplomats in Bangkok who spoke to
"We expect the royal succession to designated heir Crown
Prince Maha Vajiralongkorn will be stable and that market
volatility around the king's death will not be long-lasting,"
Eurasia Group said.
Overall, the impact on the investment environment will be
"relatively minor" and limited to what is likely to be an
initial mourning period of 100 days, it added.
There is likely to be a drop in some economic activity, said
Ernest Bower, who heads the Bower Group Asia business
consultancy. Businesses will "experience a temporary drop in
sales as Thais limit consumption during the mourning period," he
Bower also said there will also be some increased
absenteeism and lower productivity.
The Stock Exchange of Thailand's benchmark index
fell as much as 6.9 percent on Wednesday to its lowest since
March 1, but recovered to close down 2.5 percent.
It closed 0.47 percent up on Thursday before the
announcement of the king's death.
Banks and financial markets will open as normal on Friday,
industry association officials said.
Nordea Markets' chief analyst Amy Yuan Zhuang, based in
Singapore, said the economy was not as sentiment-driven as the
baht, which could be vulnerable to capital outflows.
"We have only seen two or three days of net outflows from
the local equity and bond markets and the sizes are not very
big," Zhuang said before the announcement of the king's death.
But she added that outflows could increase.
Thai business leaders say privately they are confident the
military government will ensure a smooth transition.
King Bhumibol was widely loved and most Thais have known no
other monarch. Although his health had been poor for years, many
will be shocked and deeply saddened by his death and will wear
black and make offerings at Buddhist temples.
A royal cremation is likely to take months to prepare,
according to palace tradition and two royal funerals over recent
decades. Mourning rituals in temples are likely to be observed
for many months, perhaps even years, if recent royal funeral
rites are repeated.
Companies are likely to postpone some kinds of events, such
as product launches, for the initial mourning period, the
Eurasia Group said.
(Reporting by Jongwoo Cheon; Editing by Raju Gopalakrishnan and