Developing World Healthcare Blog

Thailandís "Other Factors"

We try to avoid writing consecutive posts about a single country, but Thailand’s stock market recently experienced a sharp 10% correction (as measured by the SET Index) earlier this month before partially recovering last week. One factor was concern about the timing of interest rate increases by the US Federal Reserve, but then there are the “other events” or “domestic factors” as reported by the Thai press. These terms are a coded reference to the health of King Bhumibol Adulyadej, Thailand’s 88-year old monarch. The careful choice of words reflects the country’s strict lèse majesté laws that provide 3-15 years’ imprisonment for saying or writing anything deemed to insult, defame or threaten the king, queen or heir apparent.

The king has been hospitalized for a year, and last appeared in public on 11 January. The Royal Household has issued 35 press releases during his hospitalization, including four issued in a single week in early September after he suffered a severe infection. This episode caused the decline in the market. 

Why the Intense Focus on the King’s Health?

King Bhumibol is the world’s longest ruling monarch, having ascended the throne on June 9, 1946. The population views him as a symbol of unity and guide of the nation. Even Thailand is a democracy, he (and the monarchy) play a crucial role in the country’s politics. The heir apparent is 63-year old Crown Prince Maha Vajiralongkorn, but Thailand’s constitution allows his sister, Princess Maha Chakri Sirindhorn, to ascend to the throne under certain circumstances. In case you’re wondering, the Privy Council (members appointed by the king) nominates the successor to the cabinet and parliament. 

The monarchy’s importance reflects the difficult realities of the country’s politics. There have been 11 successful military coups, and seven failed ones, since 1932. The most recent coup was in 2014, and the military remains in charge. We will avoid a deeper discussion of the subject, and suggest the following opinion piece from the South China Morning Post on recent developments and their political significance:

                                                                                                                                                                                     

http://www.scmp.com/week-asia/article/2018057/why-no-one-wants-rule-thailand-other-military

What are the Investment Implications?

Two of Thailand’s largest hospital companies, Bangkok Dusit Medical Services and Bumrungrad Hospital, derive 30% and 64% of revenue from non-Thai patients.  Some of these patients are local expatriates, but the majority are either tourists who have emergencies or “medical tourists” from outside Thailand who require care unavailable in their home countries. Neighboring Myanmar has emerged as a significant market for both companies. Not surprisingly, political turmoil will interrupt this business as the hospitals (and various embassies) warn patients about traveling to Bangkok. The length of interruption is difficult to forecast, but it is usually brief (less than 90 days), and the patient visits snap back quickly. We think the quick recovery reflects the high quality of these hospitals’ services and durability of their reputations.

One Final Thought

Beside the stock market decline, is there any other reason to discuss this now? To provide a distraction from the U.S. political situation.

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