Veteran emerging markets investor Mark Mobius remains positive about prospects for the Thai economy after the recent death of the country’s highly revered monarch, King Bhumibol Adulyadej.
‘I had lived in Thailand many years ago, and was personally saddened to hear of his passing and know how highly revered he was there,’ the executive chairman of the Templeton Emerging Markets group said in an update after the King's death.
However, his views on the economy in the aftermath of the event remain broadly positive. ‘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 and valuations appear reasonable.’
Despite the market volatility he have seen so far, Mobius noted that the Stock Exchange of Thailand is generally higher than its 2016 lows, and the baht remains above its lows seen in early 2016.
‘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 impact the media and entertainment industries, for example, and there could be secondary impacts on tourism.’
He pointed out that uncertainty relating to the monarchy has been a long-running concern of both domestic and foreign investors; accordingly, many market participants have excess holdings of cash that may act as a spur to the market as these fears pass with a 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,’ Mobius added.
‘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 resilience of its people and economy as well as the competence of its bureaucracy.
‘Recent events do not fundamentally alter our positive outlook toward the country as a whole.’