☕️ Johor heading for snap election, 4th state since 2020

1. MARKET SUMMARY

2. NUMBERS AT A GLANCE

73,000 — the number of nights Cathay Pacific Airways crew collectively spent in quarantine in 2021. It’s roughly equivalent to 200 years. How long can the zero-Covid policy last?

USD1.7 bil worth of student loans was cancelled by Navient Corp as part of the settlement with 39 states in the US. The state officials said Navient promised to help struggling borrowers (almost 70,000 of them!) find affordable repayment plans but instead steered them into expensive long-term repayments.

The holiday season in the US notched up USD886.7 bil in retail holiday sales last year, according to data from the National Retail Federation (NRF).

3. COVID-19 SUMMARY

• New research data published by Sinovac Biotech Ltd shows that three doses of the Sinovac Covid-19 vaccine produced higher neutralising antibodies against Variants of Concern (VOC), including Omicron than two doses of the same vaccine. We can’t help but see the lack of independence of the study.

• A new study conducted at Oregon Health and Science University during the Delta wave showed the best protection against future Covid-19 infection is vaccination and prior infection.

4. IN MALAYSIA 🇲🇾

1. Johor heads into a snap poll after its ruler Sultan Ibrahim consented to the dissolution of the Johor state assembly. This will be the country’s fourth state election since 2020 after Sabah, Melaka and Sarawak. Menteri Besar Hasni Mohammad justified the call for this election to get a fresh mandate to form a stronger government as the current one fell to a one-seat majority after the death of Kempas assemblyman Osman Sapian. Johor Pakatan Harapan stood firm on its view that the current situation is not appropriate for a state election as the state is suffering problems from the Covid-19 pandemic, flood and economic problems. The state election is estimated to cost RM150 mil. The opposition bloc also questions the need to have a state election when the current term is due to end in about a year.Close to 2 mil voters will head to the Johor polls and set to become the first election to have 18-year-olds as voters, following the implementation of Undi18. A total of 5,718,760 Malaysians aged 18 and above have been automatically registered as voters, with Johor seeing some 700,000 newly registered voters eligible to vote.

2. According to Mingguan Malaysia that quoted a source, former Bank Negara governor Zeti Akhtar Aziz and former minister in the PM’s Department Nor Mohamed Yakcop are being investigated by the MACC over ties to 1MDB and Zeti’s husband, Tawfiq Ayman is also being investigated by the police over allegations that he received funds related to 1MDB.

3. Following Lee Zii Jia’s resignation from BAM, BAM has decided to ban him from playing in international tournaments for a 2-year period. In order to play in any Badminton World Federation-sanctioned tournaments, shuttlers have to be registered through their national associations.Youth and Sports Minister Ahmad Faizal Azumu said he would personally meet with both BAM and Lee Zii Jia to seek an amicable solution.

4. The peaceful #TangkapAzamBaki rally saw the police efficiently deploying its resources, with more than 1,010 police officers deployed during the rally, closing six roads and 25 MRT, LRT and monorail stations. Where art thou during the floods?

5. Bank Negara Malaysia (BNM) has maintained its Overnight Policy Rate (OPR) at 1.75%, considering it “appropriate and accommodative”. Malaysia’s inflation measured by the Consumer Price Index (CPI) increased to 3.2% in Dec 2021, making the country’s 2021 inflation at 2.5% compared to a 1.2% deflation in 2020.For many of us that are uninformed and lack awareness of monetary economics, inflation is not merely prices of goods and services increasing. The increase in prices is the symptom of the problem befalling the economy due to the increase of money supply or simply put, the printing of money. Whilst goods and services production remains the same, the supply of money grows at a faster rate and bid up prices. The Keynesian economics school of thought, followed by most central bankers, believe that economic growth can only be achieved with the growth of money supply. In reality, it has been shown again and again that it caused inflation in prices and growing wealth disparity. In the case of Malaysia, our M2 money supply (a measure of the money supply including physical cash, current accounts and easily convertible near money) has grown 4x from RM0.5 tril in the mid-2000s to RM2,1 tril now. An interesting write-up here on inflation and the Ringgit.

6. Genting Malaysia Bhd said that “preparations are underway” for the opening of its outdoor theme park, Genting SkyWorlds but did not specify when it would be opened to the public. An analyst from Affin Hwang Investment Bank Bhd forecasted that the theme park will be operating below its 20,000 visitors/day capacity due to social distancing requirements and hence would be operating at a loss. The analyst does not expect Genting SkyWorlds’ opening to have material on the company’s financials. Genting Malaysia Bhd’s market cap currently stands at RM16.9 bil.

7. Crystal Cruises, owned by Genting Hong Kong Ltd, had one of its ships diverted to Bahamas instead of its scheduled stop in Miami as an arrest warrant has been issued to seize it in Miami to repay a USD1.2 mil unpaid fuel bill. Genting Hong Kong Ltd does not have any cross-shareholdings with the other Genting group of companies but shares a common shareholder, Lim Kok Thay, the son of the late Lim Goh Tong, who owns 76% of Genting HK. A short history of Genting’s cruise ventures here.

5. AROUND THE WORLD 🌎

1. Beijing 2022 official warns athletes about speaking out on human rights, citing violation of ‘Olympic spirit’. Athletes that violate the spirit could be subject to punishment. On the other hand, the International Olympic Committee (IOC) has made it clear that athletes are free to express their opinions on any matter in news conferences and interviews within the Olympic bubble.

2. Foxconn Technology Group’s key iPhone assembler Hon Hai Precision Industry Co., hinted it might achieve “unprecedented” performance in the first quarter. It is likely that some staff at key sites will only get two days off during the lunar new year holidays. Manufacturers are racing to build up inventory in anticipation of omicron outbreaks that could further disrupt their supply chain.

3. A tit for tat? Serbia has withdrawn the exploration licences of Anglo-Australian mining company Rio Tinto in response to requests from environmental groups. The decision to abandon the USD2.4 bil Jadar lithium mine was made following weeks of protests over plans for the lithium mine. The relationships between the two countries have also soured following the deportation of Novak Djokovic.

4. Hodler MicroStrategy Inc. shares tumbled 17.8% last Friday after the US Securities and Exchange Commission reportedly rejected the company’s bitcoin accounting strategy — bitcoin impairment charges in the company’s non-GAAP measures. As of the end of 2021, MicroStrategy held 124,391 bitcoins. MicroStrategy’s average bitcoin price is USD30,159 per bitcoin.

5. American exercise equipment and media company, Peloton is temporarily halting production of its bikes and treadmills as consumers aren’t throwing as much money into at-home fitness equipment anymore. Peloton shares rallied more than 440% in 2020 but dropped 76% in 2021. CNBC also reported the company is working with McKinsey & Co to look for ways to cut costs.

6. Airbus has cancelled a USD6 bil contract with Qatar Airways for 50 of its new A321neo passenger jets. The legal battle started when the airline complained the paint on the recently delivered Airbus A350s was cracking and peeling, exposing copper meshing used to insulate the aircraft against lightning strike. Qatar is seeking more than USD600 mil in compensation after grounding 21 out of its 53 A30 jets due to the safety issue.

7. Morgan Stanley expects Brent crude oil to increase to USD100 per barrel by Q32022 because of three main reasons — low inventories, low spare capacity, and low investment. The bank also said the supply capacity would shrink to 2 mil barrels a day in the middle of 2022 from the current 3.4 mil. The investments in the sector are expected to tumble as more companies move toward green initiatives. Goldman Sachs has echoed the same tone, saying Brent prices could surpass USD100 a barrel.

8. New Zealand Prime Minister Jacinda Arden has cancelled her wedding as the nation imposes new restrictions to slow the outbreak of the COVID-19 Omicron variant. She was quoted saying, “I am no different to, dare I say it, thousands of other New Zealanders who have had much more devastating impacts felt by the pandemic.”

9. The US has ordered the relatives of its embassy staff in Ukraine to leave following reports that Russia is planning significant military action against Ukraine. Russia has denied claims that it is planning to invade Ukraine. The US said the situation can deteriorate with little notice.

6. FOR YOUR VIEWING PLEASURE 👁👁

1. The state of Malaysia vs other ASEAN countries

2. How to (maximise the probability) of surviving a plane crash