Discover more from The Coffee Break
☕️ About loans: RM10 bil Ah Long loans, RM1.3 bil EPF-backed personal loans, 10-sec approval home loan
28% of Malaysia-China bilateral trade to use MYR. Honda x Mitsubishi to create an electricity grid of EVs. The largest acquisition of the year - Exxon's USD60 bil offer for Pioneer Natural Resources.
1. MARKET SUMMARY 📈
2. NUMBERS AT A GLANCE 🔢
The next time you visit Mid Valley Megamall or The Gardens Mall, know that you are walking into a RM5.186 bil property development. The combined properties were revalued recently, showing an appreciation of RM166 mil as of Sep 30. The market value for Mid Valley Megamall is RM3.79 bil and The Gardens Mall is RM1.396 bil. You can own a small piece of these two properties by buying IGB REIT (real estate investment trust) listed on Bursa Malaysia, which paid a yield of 5.87% #notfinancialadvice. An easier and more cost-effective path to be the ‘coveted’ property investor than buying and managing your own property. Learn more about IGB REIT here.
Singer Katy Perry has sold the master recordings and publishing rights for the first five albums she released between 2008 and 2020 for USD225 mil to Litmus Music, the company backed by private equity giant Carlyle. The remainder of the masters is owned by Universal Music Group. Other artists that have sold their rights and made big bucks include the likes of Justin Bieber, Red Hot Chilli Pepper, Dr Dre and Justin Timberlake - see table here for more on these transactions.
Another interesting fact about these music rights is that artists could borrow money against future royalties through an asset-backed security structure. David Bowie first pioneered this in 1997 when he issued USD55 mil in Bowie Bonds, paying 7.9% interest per year. For us ordinary people, we pajak our gold, jewellery to borrow. Artists could pawn their music catalogue instead.
How heavy can a pumpkin grow? Your guess is most likely to be wrong. A monster pumpkin weighing 1,247 kg (view the images, real massive), the same as a hippopotamus, has been crowned the heaviest pumpkin. The owner, Travis Gienger, took home USD30,000 at the 50th World Championship Pumpkin Weigh-Off in California. Gienger said he gave his gourd more TLC, watering them up to 12 times a day and feeding and fertilising them more than usual. Any agriculturist amongst our readers to tell us if a Watermelon Weigh-Off is possible?
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3. IN MALAYSIA 🇲🇾
Loans, loans, and Ah Longs
Deputy Home Minister Dr Shamsul Anuar Nasarah told the Parliament in response to Besut MP (PN) Che Mohamad Zulkifly’s question on loan sharks that a total of 898 individuals suspected loan sharks were arrested by the police in the first 8 months of the year, which resulted in 196 prosecutions. He said the loan sharks have now gone digital, using social media to promote their services instead of the old-school method of using posters and to combat this, the commercial crime division under the police has set up a cyber crime unit to deal with this.
The Besut MP shared that loan sharks provided loans totalling RM10 bil to 32,880 individuals between Sep 2022 to May this year, though he did not cite his source. Would be good to know too the interest rates charged. That’s an average of RM304k per person - a staggering amount.
To put it into context, if this RM10 bil figure/estimation is about right, this is 7.7x the personal loan programme, which utilises EPF contributors’s Account 2 as collateral. As of Oct 2, RM1.3 bil loan was approved for 64,619 applications, averaging RM20.1k per per person. To recap, this facility is available through Malaysia Building Society Bhd (MBSB) and Bank Simpanan Nasional (BSN), eligible for contributors above 40 and for personal loans between RM3k - RM50k.
On home loans, Maybank and Sime Darby Property have announced a strategic collaboration to offer home financing and approval at the speed of light (in relative terms to the antiquated banking industry) within 10 seconds to eligible home buyers. Application can be made at Maybank Home 2 u, receive approval in 10 seconds and the letter of offer will be issued within an hour.
Energy Efficiency and Conservation Bill passed
It’s not just how we generate electricity but also how we consume it to work towards a better climate. To this end, Dewan Rakyat has passed this bill (EECA), which provides for compulsory audits of larger commercial and industrial electricity and gas consumers. The government is taking this demand-side management (i.e. how energy is efficiently consumed) approach to meet the nation’s climate goals., apart from just focusing on the supply side, which is the generation using renewable energy.
Industry and commercial consumers with RM2.4 mil in annual electricity bills or RM1 mil in natural gas bills will be impacted. In this case, it’s good to be compliant as it is estimated to reduce electricity bills by up to 25%. The EECA is set to cover 1,500 out of 27,000 industrial consumers, which represents 7-=8-% of industrial consumption but just a sliver of commercial consumers - 500 out of 1.7 mil commercial consumers, making up 21% of consumption from the commercial segment. The compliance cost starts from RM100k per annum and non-compliance boleh settle - the proper way - attracting penalties ranging from RM20k-100k.
PM Anwar: 28% of Malaysia-China bilateral trade to use MYR instead of USD
Malaysia making small ripples in the de-dollarization wave. PM Anwar said 28% of trade transactions with China will be done in ringgit and added that Malaysia has begun “actively and aggressively” using the ringgit to trade with several countries. In 2022, the bilateral trade between Malaysia and China hit a record USD203.6 bil. Let’s do some maths - 28% of last year’s bilateral trading value would be USD57 bil, or RM288.9 bil. Another way to put this is demand for USD will reduce by USD57 bil and demand for MYR will increase by RM288.9 bil. And with higher demand, we hope the USDMYR rate will improve in our favour and bring down imported inflation.
Btw, USDMYR is nearing its all-time low (or high, depending on how you want to put it) of RM4.88, last seen during the 1997 Asian Financial Crisis.
Financially troubled Serba Dinamik Group Bhd will see its headache reduced by RM38 mil as APB Resources Bhd proposed to acquire Menara Serba Dinamik in Shah Alam for RM38 mil. The building is owned by Serba Dinamik Group Bhd, which is currently under liquidation and the transaction is subject to approvals or sanctions from relevant authorities and courts. The group has nearly RM5 bil in debt as of Jan 2023. Slowly but surely, Serba Dinamik will find its way back.
Malaysian coworking space provider WORQ announced that it is targeting to raise RM40 mil in its fourth fundraising round and that it has completed its latest round of pre-Series B fundraising (macam2 rounds) backed by 14 follow-on investors and this round, including the Leong family of Mah Sing Group Bhd. The company said it aims to triple its space under management to 450,000 sq feet by 2025 to enable 10,000 workers (for comparison, Mid Valley Megamall's gross floor area is 6.11 mil sq feet). Corporate clients now account for 70% of its demand, as compared to 20% pre-pandemic. No financials were shared apart from saying its revenue grew 80% and maintaining mid-teen net profit margins in 2023.
4. AROUND THE WORLD 🌎
AI in ASEAN to be business-friendly against EU ambitions
AI here as in Artificial Intelligence, not Anwar Ibrahim. The consideration of a hands-off stance regarding AI rules marks a setback to the EU’s push for globally harmonised rules that align with its strict framework. A confidential draft of ASEAN’s “guide to AI ethics and governance” is being circulated to tech companies, such as Meta, IBM, and Google, for feedback and is expected to be finalised at the end of January 2024 during the ASEAN Digital Ministers Meeting. The guide asks companies to take the countries’ cultural differences into consideration and does not prescribe unacceptable risk categories, unlike the EU’s AI Act.
Asian Tech: Of chips and cars
Samsung's sequential quarterly improvement sparks hopes of chip industry recovery
The South Korean tech giant saw continued quarterly improvements in sales and operating profit, leading to the firm’s shares rallying 2.7% over the local index as investors take this as a sign that the chip industry downturn may be over. Samsung forecasted an operating profit of USD1.79 bil for the latest quarter, with a revenue of about USD50 bil. The rally also partially reflects a growing market consensus that prices of dynamic random access memory chips have begun bouncing back.
Honda, Mitsubishi to create an electricity grid of EVs
Honda will be creating a utility business in partnership with trading house Mitsubishi Corp, where electricity will be supplied and stored by connecting electric vehicles to the electricity grid. The joint venture is expected to launch in 2024 and uses the vehicle-to-grid concept, which sees EVs supplying electricity to the power grid (sounds like a new monetisation opportunity for EV owners) in high-demand periods, such as the evening. The EVs would instead recharge their batteries while overall demand is low.
Read: Vehicle-tp-Gri (V2G) - everything you need to know.
Gen Z loves iPhones and this means big future business for Apple
The results of the study conducted by Piper Sandler (view research here) showed that 87% of the teenagers polled said they own an iPhone, and 88% expect the iPhone to be their next phone. This is a sign of “a well-ingrained habit”, which bodes well for the tech giant, especially as it continues to introduce new models. And it won’t just stop at the phones and these consumers will suck into the Apple ecosystem. As the saying goes - once you go
black Mac, you never go back. Other Apple products also showed popularity, with 42% using Apple Pay and 34% owning an Apple Watch. However, less than 40% of the teens polled were using Apple Music, with Spotify claiming the top spot with over 70%.
Largest acquisition of the year - Exxon to acquire shale rival Pioneer for USD60 bil
Exxon Mobil is set to acquire rival Pioneer Natural Resources, giving Exxon a dominant position over the Permian Basin, the largest US oilfield. The USD60 bil all-share deal is the largest acquisition of the year and Exxon’s largest deal since its USD81 bil purchase of Mobil Oil in 1998. Analysts expect the deal will lead to further consolidation of the still-fragmented US shale industry. Pioneer can produce a barrel oil at a rock-bottom cost of USD10.50, and with oil at current prices (see our market summary table above), that’s a real thick profit margin!
Learn: What is shale oil?
Afghanistan hit by second quake days after first quake killed over 1,000
The second 6.3 magnitude earthquake that struck western Afghanistan led to more than 100 injured after the first quake, also measured at a magnitude of 6.3, killed more than 1,000 on Saturday. Aid agencies have indicated a shortage of blankets, food, and other supplies. The wider impact of the second quake remains unclear, as many were sleeping in the open after their homes were destroyed during the first quake.
Remaining Titan sub debris found and recovered
Engineers have recovered the rest of the debris of the Titan submersible, along with presumed human remains from the Atlantic seabed. The submersible, marked as experimental, was destroyed during a dive down to the Titanic’s shipwreck in June.
Gene edition might mean chickens immune to bird flu
Researchers have developed gene-edited chickens that are partially resistant to bird flu and believe that it might be possible to block the virus in three years, with further DNA changes potentially leading to fully immune chickens. Gene editing involves making precise changes to DNA to change the function of a gene. In this case, three genes identified as vital for the bird flu virus to reproduce were altered.
23andMe resets user passwords following data leak
The genetic testing company is requiring all users to reset their passwords “out of caution” after confirming that hackers had obtained some users’ data. The firm is also “encouraging the use of multi-factor authentication”. The compromised data was put up for sale by hackers, with individual profiles going for anywhere between USD1 to USD10.
5. FOR YOUR EYES 📺
Together with Mr Money TV, we turned The Coffee Break into video commentaries. Check out the third and latest weekly news roundup by FAQ Show (a brand under the MrMoneyTV family) released yesterday. Watch the first two episodes here and here. Let us know what you think of this format, or just say hi to us simply by replying to this email!
A combo feature today of comics by themokumentary because it’s too damn relevant. Mask up and stay hydrated folks!