Bucking expectations of steep sell-offs and political upheaval, Thai equities and the baht clawed back some ground on prospects of a smooth succession after King Bhumibol Adulyadej's death.
The world's longest-reigning monarch, who died at the age of 88 on Thursday, was long regarded as a unifying figure in a country prone to bouts of internal conflict.
Asian markets, except for Malaysia and Taiwan, were higher after China's inflation data beat expectations, boosting optimism about the health of the world's second-largest economy.
Leading the rally, Thailand surged 4.59 per cent, the most since 2013 but is still down 1.8 per cent for the week. The baht advanced 1.3 per cent to 25.418 against the Singdollar and nearly 1 per cent to 35.185 against the greenback.
Global funds have poured US$3.8 billion (S$5.2 billion) into Thai equities in the first nine months this year, sending its stock exchange up nearly 15 per cent in that period, the most in the region after Indonesia.
Because the military is in charge, and not groups affiliated with the 'red shirts' or 'yellow shirts', we will likely have political and economic stability in Thailand.
CIMB ECONOMIST SONG SENG WUN
Singapore rose 0.35 per cent, led by gains in Thai Beverage - sold down this week on concerns over the Thai King's health.
CIMB economist Song Seng Wun sees a smooth transition.
"The selling looks overdone... Because the military is in charge, and not groups affiliated with the 'red shirts' or 'yellow shirts', we will likely have political and economic stability in Thailand," he said, referring to the red shirts who are staunch supporters of ousted premier Thaksin Shinawatra, and the yellow shirts who are pro-military and against Thaksin and his successor.
Economists are divided over the political ramifications for South- east Asia's No. 2 economy. Already, political unrest in the past decade has weighed heavily on investment, causing growth to slow.
"Public infrastructure projects have stalled amid frequent changes of government, while private investors have been reluctant to commit funds in such an unpredictable environment. Investment growth has averaged just 3 per cent over the past decade, lower than any other major economy in South-east Asia. The lack of investment is undermining the economy's future productive capacity," noted Capital Economics.
"We estimate the 2013 to 2014 political unrest knocked around 0.7 percentage point off growth. A recession cannot be ruled out if the King's death leads to a renewed flare-up," said Capital economists Krystal Tan and Gareth Leather.
The economy has come under strain of late given weak global demand, a private investment slowdown and inflation near 0 per cent.
The tourism sector - about 10 per cent of economic activity - has been one of the bright sparks in recent years. But it could be among the worst hit if tensions flare up again, analysts warned.
But Mr Ng Kee Chou, a Kuala Lumpur-based analyst with RHB Capital, told Bloomberg tourism may not be badly hit given that recent terror attacks and political uncertainty had little impact on arrivals.