Thailand In Turmoil: Who Will Be The Next King (Or Queen)?

Barron's Asia

Thailand In Turmoil: Who Will Be The Next King (Or Queen)?

December 16, 2014, 8:17 P.M. ET

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The Thailand SET Index has fallen 8.5% since Thailand’s monarch Bhumibol Adulyadej cancelled the public celebration of his 87th birthday, on the advice of doctors who said he was too ill to make a public speech. Last week, the wife of the 62-year-old Crown Prince Maha Vajiralongkorn was demoted to a commoner after members of her family were arrested on corruption charges.

The events set off speculation that a royal succession is in order. The last royal succession was in 1946 when Bhumibol succeeded his older brother Ananda Mahidol, with the latter dying  after being shot in his bedroom.

Not surprisingly, the stock market is nervous. The dollar-denominated iShares MSCI Thailand Capped ETF (THD) has fallen nearly 11% in the meantime. Daily trading volume this week was over $550 million, well above the 30-day average of $375 million.

Prime Minister and military coup leader Prayuth Chan-ocha has said the sudden drop in stocks was because of “false rumors”. Teneo Intelligences Bob Herrera-Lim called him out on this and said market volatility was down to uncertainty over a royal succession:

Given recent developments, such rumors may be related to the succession. Other large cap, non-energy companies dropped almost simultaneously with PTT, including retailer Big C Supercenter, which at its worst plunged 20% during the day, and food company Charoen Pokphand Foods, which dropped 13% before recovering. Telecoms stocks Advance Info Systems and True also fell. Previous instances of large stock market drops were in 2010, a year after Bhumibol was hospitalized and questions over his health suddenly increased, and in 2007 after the then military-installed government floated a draft amendment to the foreign business act that would make it more difficult for foreign investors to control domestic enterprises.

So what will happen when the much revered King dies? “The most likely scenario is that the succession will be multi-year affair, starting with a year-long tribute to King Bhumibol,” wrote Herrera-Lim. Crown prince Vajiralongkorn, an unpopular figure in Thailand for his extravagant lifestyle, is likely to take the throne, although Herrera-Lim sees the scenario whereby his sister Royal Princess Maha Chakri Sirindhorn, who is liked by the Thais, may take over:

The alternative to Vajiralongkorn is Royal Princess Maha Chakri Sirindhorn, who is well-liked by Thais and would be better placed to preserve some of her father’s goodwill. However, Thailand has never had a female monarch and Sirindhorn had previously disavowed any interest in becoming queen. A third option is the Crown Prince’s nine year old son, with Sirindhorn acting as a regent.

And what’s the deal with Vajiralongkorn’s wife, formerly Princess Srirasmi, being demoted to a commoner? “Corruption is not uncommon among elite networks in Thailand, especially with the police, so the dismantling of Srirasmi’s network may be an effort by the prince to convince his opponents in the military and the monarchy that he is willing to take the needed steps to preserve the institution’s goodwill and, by consequence, its political power. Srirasmi was not only unpopular but controversial, tied to the prince’s freewheeling party life.” Search Srirasmi’s name on Google and you will find an interesting birthday party celebration video, which common Thais find particularly distasteful. Plus, the crown prince “appears headed for his fourth [wife],” said Herrera-Lim. Read BBC‘s analysis “What’s behind the downfall of Thailand’s Princess Srirasmi?




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