A New Constitution Has Been Approved In Thailand: What Does It Mean For Thai Beverage Public Company Limited And United Overseas Bank Ltd?

The citizens of Thailand had recently approved a new constitution drafted by the country’s current military rulers when they took control in a 2014 coup. The constitution paves the way for general elections to take place in Thailand in the future.

According to the BBC, part of the new constitution would require Thailand’s 250-seat senate to be fully appointed by the military. This would likely help entrench the role of the military in the country’s politics.

For investors in Singapore, an important question could be whether the new constitution in Thailand would help bring about lasting political stability; Thailand has experienced relative stability since the military rose to power.

In 2014, Thailand was Singapore’s ninth largest trading partner. There are also big companies in Singapore’s stock market that have businesses in Thailand. Two such companies within the Straits Times Index  (SGX: ^STI) would be Thai Beverage Public Company Limited (SGX: Y92) and United Overseas Bank Ltd (SGX: U11).

In 2015, 96% of Thai Beverage’s revenue was derived from Thailand. In terms of the type of business the company is in, 87% of revenue in 2015 came from the sale of alcoholic beverages (spirits and beer), 9% were from non-alcoholic beverages, and 4% were from food. It’s worth noting that the current Thai government does not encourage the consumption of alcohol.

UOB is a very different company to Thai Beverage – it is a bank, and one of the largest in Southeast Asia. In its 2015 annual report, UOB stated it had over 500 branches and offices across the world. Of that count, 157 were in Thailand.  Only Indonesia topped Thailand at 190 branches; Singapore came in at a distant third with 74 branches.

But despite UOB’s network in Thailand, only S$11.5 billion of its S$207 billion loan portfolio in 2015 was sourced from the country. All told, Thailand accounted for 4.5% of UOB’s total profit before tax in 2015.

There are more companies in Singapore’s stock market that are exposed to Thailand. Investors who are interested in or invested with those companies may want to keep an eye on developments in Thailand’s political scene.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn't own shares in any companies mentioned.