☕️ Bersatu shot itself in the foot over Anti-Hopping Law

1. MARKET SUMMARY 📈

Big Three credit rating agency Moody’s Investors Service slashed its outlook for the US’s credit rating from “stable” to “negative”, pointing out three risks: high interest rates, the government’s growing debt pile and political polarisation in Washington. This is not a downgrade in credit rating but signals adverse prospects for the US. Its two other peers also did the same — Fitch recently slashed its credit rating for the US from the top-tier AAA to AA+ in August, whilst Standard & Poor’s was way ahead and did the same back in 2011 

2. NUMBERS AT A GLANCE 🔢

Penang remained the nation’s top exporter in September 2023 with a 34.6% share worth RM43 bil, according to the Department of Statistics Malaysia (DoSM). This is followed by Johor (19.3%), Selangor (17.1%), Sarawak (6.8%) and Kedah (5%). These five states accounted for 82.8% of the country’s exports.

If you are a residential property investor, here’s a somewhat good piece of news for you. Malaysia’s residential property overhang recorded an improvement, with a total of 28,286 overhang units worth RM18.3 bil (average RM646.9k) recorded in the first half of 2023, down by 5.3% and 0.6% in terms of volume and value each, respectively against the same period last year. 58% of the overhang units were condominiums and apartments. As for the office sector, the outlook remains challenging — the average occupancy rate was 72.4% vs 70.8% in H1 2022 and there was 5.06 mil sq m of vacant office space, more than half of which was in KL.

If you are looking to break into the investment world, you might want to consider obtaining the Chartered Financial Analyst (CFA) qualification. There are three levels, and here are the recent passing rates: 38% for Level 1 in Feb 2023, 52% for Level 2 in May, and 47% for Level 3 in Aug 2023. AI wouldn't come for these jobs so soon — a recent study showed that ChatGPT would likely not pass the CFA Levels 1 and 2 under all tested settings.

3. IN MALAYSIA 🇲🇾

Bersatu shot itself in the foot over Anti-Hopping LawFormer minister Khairy Jamaluddin revealed that a discarded anti-hopping clause, initially rejected by Bersatu, has come back to haunt the party. The clause, aiming to declare a seat vacant if an MP defies party stance or fails to comply with the party whip, was omitted from the bill following Bersatu's opposition. Simultaneously, Saifuddin Nasution Ismail, PH secretary-general, also highlights PN's resistance during the drafting process on his Facebook.

Now, as four Bersatu MPs pledge support for the Anwar Ibrahim government, the party grapples with the consequences of its earlier decision. Amid calls for a review from President Muhyiddin Yassin, concerns arise about the potential exploitation of this loophole in the anti-hopping law. In a twist of political irony, the Bersatu seems to have performed a perfect hop, skipping the crucial 'vacant seat' clause and leaving the party to chase its MPs like a game of political hide-and-seek.

Selangor unveils ambitious 2024 budget, eyes debt settlement and city status for KlangSelangor's Menteri Besar Datuk Seri Amirudin Shari reveals the state's 2024 budget of RM2.53 billion, aiming to reduce the deficit and settle its debt of RM19,207,475.78 owed to the Federal Government. The budget prioritises administrative expenses and development, with a focus on taxes, water management, and food security. Additionally, more than 20,000 civil servants will receive a two-and-a-half months' salary incentive. 

Amirudin welcomes the decision to upgrade Klang Municipal Council to city status, aligning with the Greater Klang Valley vision, making Klang the fourth city in Selangor to obtain city status after Petaling Jaya, Shah Alam and Subang Jaya. The state government has also proposed to consolidate all four local city councils for greater efficiency and to streamline processes, including standardising processes and approvals for business and license applications.

Legal triumph: Malaysia successfully defends diplomatic assets against Sulu heirs' claimsMalaysia achieves a significant legal triumph as the French Court rejects claims by defunct Sulu heirs over the country's diplomatic assets. The court annulled the order to mortgage a Malaysian diplomatic building in Paris, effectively putting an end to the Sulu group's attempts to seize Malaysian assets globally. Minister Azalina Othman Said emphasises that Malaysia will not compromise on illegal and baseless claims. The victory in France adds to previous successes in Spain, Luxembourg, and the Netherlands, strengthening Malaysia's position against the Sulu group's purported final award of USD14.9 bil. The government remains committed to safeguarding Malaysia's interests and sovereignty.

Lim Guan Eng initiates legal action against MP Siti Mastura for 'hate speech' and baseless allegationsDAP chairman Lim Guan Eng has instructed his lawyers to initiate criminal proceedings against Kepala Batas MP Siti Mastura Mohamad for what he deems as "hate speech" and false accusations. Guan Eng alleges that Mastura made racist and extremist claims, including baseless family ties between DAP leaders and individuals like Lim Kit Siang, Chin Peng, and Lee Kuan Yew. Despite a 48-hour deadline for an apology, Mastura has not recanted or provided evidence for her statements. Guan Eng calls on PAS leaders to address the issue.

Business

1. The Securities Commission Malaysia (SC) pursues the forfeiture of a property and shares in Bright Packaging Industry Bhd, owned by businessman Ricky Wong Shee Kai, currently at large. The property, valued at over RM20 mil, and shares held by Wong's holding company are subjects of the SC's legal proceedings. Wong, accused of violating the Capital Markets and Services Act, left the country in 2021, prompting arrest warrants. Legal proceedings are underway, with the SC seeking forfeiture and investigating an alleged unlawful acquisition of Bright Packaging Industry shares.

2. It’s official — Sime Darby exits the healthcare business. Sime Darby and its Australian partner are selling its entire stake in Ramsay Sime Darby Health Care (RSDH) to Columbia Asia for RM5.7 billion cash, marking the conglomerate's exit from the healthcare sector. RSDH operates four hospitals in Malaysia and 3 in Indonesia. The deal enables Sime Darby to unlock value, yielding a RM2 bil gain on disposal. The funds will strengthen the core businesses of industrial and motors, reducing borrowings from the UMW Holdings acquisition. Columbia Asia is jointly owned by Hong Leong Group and private equity giant TPG.

Shorts

1. Malaysia marks a historic achievement as its inaugural picosatellite, SpaceANT-D, measuring just 5cm and weighing 250g, successfully launches aboard a SpaceX Falcon 9 rocket from the US Vandenberg space force base in California. Developed by University Sains Malaysia's spinoff company, SpaceIn Sdn Bhd, the picosatellite adheres to the PocketQube standard, allowing universities to engage in space science and exploration. The mission, a collaboration between USM, SpaceIn, and the Malaysian Amateur Radio Transmitters' Society, aims to explore applications in agriculture, forestry, and oil and gas industries.

2. WWF-Malaysia has called for urgent measures to address the declining populations of prey — wild boars and Sambar deer. The organisation emphasises the need for a prey augmentation approach to create a healthier ecosystem, reducing the necessity for tigers to enter human settlements in search of food. The statement comes in response to recent tiger attacks in Pos Pasik, Gua Musang, resulting in three fatalities within a month. The decline in prey species, particularly Sambar deer, is identified as a contributing factor to the rise in fatal tiger-human interactions.

4. AROUND THE WORLD 🌎

Warren Buffett accused of violating ethics policiesCorporate scandal is aplenty. But when it comes to the legendary investor Warren Buffett who has maintained a squeaky-clean reputation for decades, it’s kinda big issue. ProPublica had obtained a leak tax filing of the legendary investor Warren Buffett, which contained details of Buffett’s share transactions of at least USD466 mil (which, compared to his overall wealth, is a rounding error) between 2000 and 2019. 

ProPublica’s story accused Buffett of violating his own rules at Berkshire Hathaway as these transactions involved shares that were owned by Berkshire Hathaway, Buffett’s primary investment vehicle. Berkshire’s ethics policies bar Buffett and employees with inside knowledge of what the company is buying/selling from trading these securities. The three stocks involved were Wells Fargo, Walmart and Johnson & Johnson. In one instance in Apr 2009, Buffett sold USD20 mil of Wells Fargo even though he was publicly talking up the bank as one of its largest shareholders, and Berkshire boosted its stake during the next quarter. Neither Buffett nor Berkshire have responded to ProPublica regarding the trades. 

One financial author speculated that it could be Buffett wanting to get out of the transactions he sold whilst Berkshire was buying so he wouldn’t be personally taking a seat at the shareholders’ table. And in other transactions, Buffett only traded the shares after Berkshire was done.

Biden-Xi meeting on Nov 15US President Joe Biden and Chinese President Xi Jinping will be meeting this Wednesday, Nov 15, in the San Francisco Bay area on the sidelines of the APEC Summit. The discussion primarily will centre around reopening important military communications channels that have been cut off, managing competition and addressing security issues. Both last met in Bali, Indonesia, in Nov 2022, and this upcoming meeting would be the two leaders’ seventh interaction during Biden’s presidency and the pair’s second in-person meeting. 

One of the important agendas in this meeting is the signing of a deal limiting the use of artificial intelligence in nuclear weapon control systems and in autonomous weaponry such as drones, the South China Morning Post reported. Perhaps, both superpowers can discuss and push for a ceasefire in Gaza? China has been critical of Israel’s military campaign, whilst the White House has been backing it. 

Wage increase in world’s second-largest garments exporter Bangladesh Following deadly protests between police and factory workers, the government has mandated an almost 60% increase to the minimum monthly wage to 12,500 taka (USD113) from December, the first increase in 5 years. Global fashion retailers including H&M and Gap, are committed to raising purchase prices for Bangladesh-made clothing to help factories there offset the increase in higher workers’ wages, a US-based association representing more than 1,000 brands said. Labour costs account for 10-13% of total manufacturing costs. 

Low wages have helped Bangladesh build its garment industry, making it the second-largest exporter of garments after China. The industry employs 4 mil people an accounts for almost 16% of its GDP. Despite the increase in the minimum wage, Bangladesh still lags behind other regional garment manufacturing hubs. In Vietnam, the average monthly wage is USD275 and in Cambodia averages about USD250, according to the International Labour Organisation. 

Shorts

1. Former UK Prime Minister David Cameron is making a comeback to politics. Cameron is named as the country’s new Foreign Secretary in a surprise announcement made by PM Rishi Sunak as he reshuffled his top team. Cameron served as the British PM from 2010 to 2016 and resigned after the outcome of the Brexit referendum. 

String of business disappointments

1. The Thai owner of the Miss Universe Pageant has filed for bankruptcy one year after buying the beauty pageant for USD20 mil. Its owner, Anne Jakapong Jakrajutatip, is a transgender woman who acquired the firm and made the pageant more inclusive by allowing mothers and married women to participate in the contest. The acquisition was funded through bonds but the firm missed the deadline of around USD12 mil which was due on Sep 1. Fun fact: The Miss Universe Organisation was co-owned by Donald Trump from 1996 to 2015. 

2. Lucid Motors, the EV startup widely viewed as a competitor to Tesla, has turned out to be a financial disappointment in the vast, diversified portfolio of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF). PIF’s 60% stake in the company when it went public in 2021 was worth more than USD55 bil and now, it’s worth USD5.4 bil, down a staggering 90.2%. No surprise so much wealth evaporated as Lucid has been reporting massive losses, with a recent USD630.9 mil net loss in its latest quarter. 

3. The Marvels has performed worse than expected during its opening weekend, generating USD47 mil in the US, making it the lowest in the Marvel Cinematic Universe franchise. Internationally, the movie generated USD63.3 mil, bringing its global sales to USD110.3 mil. This is the 33rd MCU movie and the MCU franchise has generated nearly USD30 bil since 2008. Investment-wise, this is a smart move by Disney, having acquired Marvel Entertainment in 2009  for USD4 bil.

5. FOR YOUR EYES 📺

1. Talk about reinventing space. Amazon opened its new office in Haarlem, the Netherlands, inside a former prison. The prison, Prison de Koepel, opened in 1901 and closed in 2016.

2. Take a tour of a bungalow in Country Heights Damansara that’s up for rental — just RM60,000 per month (RM720k pear year). Assuming a 3% rental yield, the property could be worth RM24 mil.