I lived in Thailand many years ago, and am saddened to hear of his demise and know how highly revered he is there.
While his political power was limited, His Majesty was seen not only as a stabilising force but also as a very important influence on the military, bureaucracy and all other segments of society, helping to ensure stability over his 70-year reign, which spanned many changes – and at times turmoil – not only in Thailand but also throughout the world.
When concerns about his health began to intensify, the equity market and the baht also began to suffer.
As the world’s longest-reigning monarch and given the overwhelming emotional ties the Thais have with him, the ramifications of the royal succession have been a source of uncertainty in Thailand for many years, although it is expected that His Royal Highness Crown Prince Maha Vajiralongkorn will succeed his father in due course.
I think it will take time for people to get used to the change, and while the Prince doesn’t have the same stature his father had, it is hoped the Prince will be able to step in and help Thailand move forward in a positive direction.
One thing we do know is that there is a very dynamic situation in Thailand right now. The country has been prone to coups, and has been under military rule since the one in 2014.
A general election is scheduled next year, so we could see some significant changes ahead, and investors need to be prepared for that – and also for market volatility.
Thailand’s equity market has reacted negatively to the current uncertainty, with concerns centred on possible instability due to conflicts of interest between different groups in the aftermath of the succession, including potential terrorist plots.
There are also concerns that in the aftermath of the succession – after a national mourning period – political differences could re-emerge in Thailand, which have in the past been destabilising.
However, in our view, the backdrop to the royal succession has improved drastically in recent years, with competing street protests long since passed and a new constitution approved by the electorate.
The military government remains in power to oversee any succession as well as the 2017 elections. Security across the country appears to be tight.
In general, we remain constructive on the macro situation in Thailand.
Large banks there look attractive to us, as growth has been reflected in the latest quarterly earnings reports. Valuations also appear reasonable.

Our outlook
Despite the market volatility we have seen so far, it is worth noting that the Stock Exchange of Thailand generally is higher than its 2016 lows, and the baht remains stronger than early in the year.
In the short term, we think the power transition in Thailand is likely to affect specific areas of the economy.
A period of national mourning would be expected to affect the media and entertainment industries, for example, and there could be secondary effects on tourism.
Uncertainty relating to the monarchy has been a long-running concern of both domestic and foreign investors, so many market participants hold excess cash that may act as a spur to the market as these fears pass with the succession.
In addition, Thailand’s government is embarking upon an ambitious long-term growth agenda in its recent five-year plan, with a focus on infrastructure spending, both directly from public funds as well as through state enterprises executing projects, aided by debt and public-private partnerships.
Beyond weak near-term sentiment, the structural drivers in Thailand – from a macroeconomic perspective as well as the country’s bottom-up stock fundamentals – remain attractive to us.
A reduction in longer-term uncertainty should prove positive for the Thai market.
We view Thailand’s low fiscal deficit of 3 per cent as providing room for further stimulus spending if required.
Additionally, the substantial current account surplus – above 12 per cent of gross domestic product – should be supportive of the currency and should place Thailand in a strong position to benefit from a potential recovery in global trade.
We think these factors, alongside the typical boost to spending that usually accompanies elections, are likely to have a far greater effect on Thailand’s overall economic growth than the current short-term uncertainty. I also think it’s very important to point out that while there remains potential for political friction, Thailand has a long history of rebounding from difficulties, demonstrating both the resiliency of its people and economy as well as the competency of its bureaucracy.
Recent events do not fundamentally alter our positive outlook toward the country.

MARK MOBIUS is executive chairman of Templeton Emerging Markets Group.