☕️ A day of drama in Corporate Malaysia: hostile takeover, allege insider trading, breach of fiduciary, statutory duties

Random fun fact: India officially has 2 names - India, the most commonly used one, and Bharat, an ancient Sanskrit word. This week’s G20 summit hosted by India saw Indian PM Narendra Modi sending out dinner invitations replacing “India” with “Bharat”, triggering speculation that the name of the country will officially change. It is argued that the name India was introduced by British colonial and is a “symbol of slavery”.

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

13,221 vehicles - the number of cars produced by Ferrari in 2022, up 18.5% over 2021. Despite higher production, demand still far outstrips supply. Founder Enzo Ferrari famously said Ferrari would produce “one less car than the market demand”. Ferrari’s first-ever four-door model, Purosangue SUV, is seeing a wait time of at least 3 years. Not only demand is growing, the prancing-horse brand is also seeing demand from a younger client base. Its client base has expanded for 10 quarters in a row, with 30% of its new clients younger than 40 years old.

Barbie is now the year’s biggest box office hit, raking in USD1.38 bil globally, taking it past the USD1.36 bil brought in by Super Mario Bros Movie. Together with Oppenheimer, the Barbenheimer combo helped the US summer box office to hit USD4 bil for the first time since the pandemic. Take a break, enjoy and listen to Aqua’s Barbie Girl song remix with Oppenheimer-related lyrics.

Taylor Swift keeps breaking records. Firstly, she has become the first female artist to reach 100 mil monthly listeners on Spotify, the music streaming giant announced. The other and only artist to hit this similar milestone is The Weeknd. Secondly, a movie on her Eras Tour concert that documents her wildly popular tour saw a record USD26 mil in ticket sales in the first 24 hours, beating out the record-holder Spider-Man: No Way Home with USD16.9 mil sales. The movie will be released on 13 Oct.

3. IN MALAYSIA 🇲🇾

MUDA threatens to deny govt two-thirds majority in ParliamentPM Anwar’s government with 148 MPs out of 222 barely enjoys a two-thirds majority in Dewan Rakyat. 148 is exactly ⅔ of 222 and MUDA, with just 1 seat in the Parliament threatens to withdraw its support if there is no detailed explanation from the Attorney-General’s Chambers (AGC) on its decision to withdraw charges against Deputy PM Ahmad Zahid Hamidi. A two-thirds majority matters as it is mandated for any proposed amendment to the Federal Constitution. 

MUDA President Syed Saddiq said the DNAA granted to Zahid is “one of the biggest red lines crossed” and the party would not hesitate to re-evaluate its position in the coalition and is considering a street protest. MUDA is making 3 claims it demanded to be fulfilled: 

• AGC to provide an explanation of the DNAA granted during the parliamentary sitting which will reconvene next week, and not merely through a press statement so that it can be debated. 

• Separation of the public prosecutor’s office from the AGC immediately to ensure no interference from executives in any court cases. 

• For Zahid to be charged in court immediately. 

National System Upgrade

• The Ministry of Health aims to digitalise all its facilities by 2030. Earlier in May, Health Minister Dr Zaliha Mustafa announced MOH is in the midst of developing a health information exchange platform, which will integrate the data of patients across the nation into one digital data-sharing platform. 

• BNM is working with Payments Network Malaysia Sdn Bhd (aka PayNet, which operates JomPay, MyDebit, DuitNow etc.) and the financial industry to set up the National Fraud Portal, which is expected to go online middle of next year. The portal aims to automate and enhance the ability to trace fund movements as well as identify money mules. Good initiative - but this just addresses the symptoms. 

New (digital)  bank in town The Grab-led digital bank, GX Bank Bhd (GXBank) has completed its operational readiness review and has been approved to launch effective 1 Sep 2023 by the Ministry of Finance and BNM. GXBank is a subsidiary of GSX Bank Pte Ltd, the digital bank joint venture between Grab Holdings Ltd and Singapore Telecommunications Ltd (Singtel) and a consortium that includes Kuok Brothers Sdn Bhd, a company related to Robert Kuok, Malaysia’s richest man. 

GXBank will be the first of 5 digital bank license applicants to receive approval ahead of the Apr 2024 deadline set by BNM. GXBank will beta-test amongst the employees from Grab and Kuok Group before rolling out to the public. The other license holders: Boost x RHB, Sea Ltd x YTL, AEON Financial Service x MoneyLion, KAF Investment Bank.

Business: Corporate Drama SeriesA day of hostile takeover, insider trading + share manipulation and cheating + defrauding

Hostile takeover - KNM A hostile takeover, a rare scene in Corporate Malaysia, is in action. A group of shareholders of loss-making and cash-strapped engineering group KNM Group Bhd, led by new substantial shareholder German billionaire Andreas Heeschen have sought to remove all 9 directors of the company, including its chairman Tunku Datuk Yaacob Khyra who is the single largest shareholder with a 9.44% indirect stake.

Heeschen emerged as a substantial shareholder last week of the Practice Note 17 (PN17) company with a 7.91% stake. Together with other shareholders with a 10.69% stake, Heeschen seeks to appoint 6 new directors through an extraordinary general meeting (EGM), including himself and Johor Princess Tunku Kamariah Aminah Maimunah Iskandariah bt Sultan Iskandar.

KNM’s prized asset is the German-based machinery and equipment manufacturer Borsig GmbH, last valued at EUR220.8 mil (RM1.1 bil) in a sale that did not materialise. KNM’s market cap stands at RM384.4 mil. 

Alleged Insider trading + Share manipulation - Bintai Kinden CorpBintai Kinden Corp Bhd had filed a report with the police, Bursa Malaysia and Securities Commission (SC) alleging that one of its unnamed former executive directors (ED) committed insider trading following a month-internal probe. The company found that a former ED disposed of shares before the company declared its PN17 status, raising potential insider trading concerns. Besides claims of insider trading, the company also flagged a series of unauthorised shares and cryptocurrency trading that indicate possible market manipulation. 

While the former director in question is unnamed, a Bursa filing listed that former ED Noor Azri Noor Azerai (who is 23 years old btw) dumped his entire holdings on 28 and 29 Mar, leading up to the PN17 announcement on 29 Mar. 

Read: A director of 4 listed companies at 23, who is Azri Azerai?

Breach of fiduciary, statutory duties - Prostasco Bhd The KL High Court has ordered Protasco Bhd’s former director Tey Por Yee and his associate Ooi Kock Aun to pay the company RM84.64 mil over breach of fiduciary and statutory duties related to a sales and purchase agreement signed in 2014. Prostasco sued both individuals following a failed acquisition, claiming that Tey and Ooi failed to disclose their interest in the transaction and conspired to defraud the company and undertake secret profit-making. Tey and Ooi were initially charged in court over this cae but were granted the same status as Deputy PM’s DNAA in 2017. This amount to be paid is about 92% of Protasco’s market cap of RM91.65 mil.

4. AROUND THE WORLD 🌎

Spotlight: Indonesia

• Indonesia President Joko Widodo called for ASEAN nations to remember the agreement to “not be a proxy to any powers”, warning the group against getting dragged into rivalries between world powers as proxies. Widodo made the statement when opening the 43rd ASEAN Summit in Jakarta this year. He also called on the Southeast Asian bloc to devise a “long-term tactical strategy that is relevant and meets people’s expectations”. ASEAN leaders will be holding a summit later this week to discuss the newly-released “ten-dash line” map by China, a wider forum that includes China, India, Japan, Russia, and the US.

• The transboundary haze will likely return later this year as Indonesia is fighting an increased number of wildfires due to a prolonged dry season exacerbated by El Nino. The dry weather is currently intensifying across the country, with an increasing number of hotspots detected, mostly over Western Sumatra.

• A golden visa scheme to attract foreign investors to Indonesia has seen a first recipient. OpenAI CEO and co-founder Sam Altman was issued a ten-year visa due to his “international reputation, and may bring benefits to Indonesia”. It is not known whether Altman has plans to invest in Indonesia, or if he even applied for the visa. The ten-year visa requires a USD5 mil investment in the country for individual investors. Amongst the perks of the golden visa: priority security screening at airports, longer stay periods and easier entry and exit processes, among other perks.

Singapore to expand innovative ocean CO2 removal projectSingapore will be expanding a pilot project that boosts the ocean’s capacity to absorb CO2 emissions using several emerging technologies. It’s quite innovative - the project consists of a single facility that is able to extract 100 kg of CO2 from seawater using electricity, which allows the seawater to absorb more CO2 from the atmosphere when it is pumped back out into the ocean. Singapore’s Public Utilities Board is looking to secure funds by the end of the year to build a demonstration plant that can remove 10 tons of CO2 from the ocean on a daily basis. No cents and dollars mentioned regarding this project. 

Weight-loss drug firm dethrones LVMH to become Europe's most valuable firmDanish pharmaceutical giant Novo Nordisk has overtaken French luxury firm LVMH as Europe’s most valuable company after it launched its weight-loss drug, Wegovy, in the UK, leading to shares rising in value. At the end of trading on Monday, Novo Nordisk had a stock market valuation of USD428 bil. The list price for a month’s supply of the drug in the UK ranges from GBP73.25- 175.80 depending on the dose, though the UK National Health Service negotiated a discount with the firm.

Wegovy is an obesity treatment that is taken once a week, tricking people into thinking that they are already full, so they end up eating less and losing weight. It has been described as a “miracle” drug but experts warn that it is not a quick fix or substitute for a healthy diet and exercise.

Shorts

1. Qantas boss to exit two months early amid airline scandals Qantas CEO Alan Joyce will be leaving the company two months early from his November exit date, citing “recent attention on events of the past”. The airline saw record profits despite a series of scandals (i.e. delayed refunds, selling cancelled flights tickets), leading to growing public anger, including a lawsuit from Australia’s consumer watchdog. This places the airline in three simultaneous legal cases. Still, Joyce will walk away towards a happy retirement with a final pay package of AUD24 mil, which includes 1.7 mil Qantas shares worth close to AUD11 mil.

2. Hong Kong court orders legal framework for same-sex unions within two years Though Hong Kong’s top court has refused to recognise same-sex marriages, it has ordered the city to come up with an alternative framework within two years. This follows an appeal by pro-democracy activist Jimmy Sham who sought official recognition of his marriage to his partner. The Court of Final Appeal rejected it but acknowledged that the city failed to actively provide alternative options, which violates the rights of LGBT couples.

3. China may never surpass US as the world's largest economy amid poor growth recovery China’s struggles to revive growth and strengthen its besieged property market this year after three harsh years due to strict zero-Covid policies makes it unlikely for the Asian economy to ever steal the crown of world’s largest economy from the US, with Bloomberg Economics predicting that China’s GDP will surpass the US briefly “by a small margin” in the mid-2040s, before falling behind.

5. FOR YOUR EYES 📺

1. Google, our beloved search engine, has just turned 25 on Monday and has grown to be the dominant search engine with an insane 92% market share, which Peter Thiel, co-founder of PayPal and the first outside investor to cut Facebook a cheque, calls “creative monopoly” - the good type of monopoly. Check out here the world’s most googled terms since 2003. In 2022, taking the first spot is - Wordle.

2. China’s BYD broke into the world’s top 10 biggest car companies for the first time, surpassing Mercedes-Benz and BMW in the first half of 2023. Ferrari’s production is just about 0.2% of Toyota’s - what Ferrari churns a year, Toyota does it in a day.