☕️ DAP Sec-Gen Anthony Loke explains why DAP willing to compromise on cabinet positions

Sorry folks for spamming - seems like we were hit with a technical snag again in the previous email, leading to a blank issue.Heads up - today’s issue is a bit longer than usual, but for a good reason - lots of interesting news that go well with your morning coffee. Anyways, it’s the weekend so take your time to read it!

1. MARKET SUMMARY 📈

The US Federal Reserve paused its rate hikes after 10 consecutive increases in 15 months. The benchmark rate now is between 5%-5.25%. The Fed remains hawkish and indicated it will increase rate by another 2 x 25 basis points (0.25%) by end of 2023. The Fed will also unveil on 28 June the results of its annual stress tests on the 23 biggest US lenders to weather crisis conditions.

2. NUMBERS AT A GLANCE 🔢

148 years - the waiting time for Muslims in Malaysia to perform the Haj, according to Tabung Haji. More than 3.8 mil TH depositors have registered and waiting for their turn. For the Haj season this year, the Saudi government allocated a quota of 31,600 pilgrims from Malaysia. This literally takes sabar itu separuh daripada iman to the next level.

Mark Zuckerberg, Jack Dorsey, Evan Spiegel (Snap) - we might think billionaires are getting younger and younger. Report from data Altrata found that billionaires are a lot older than we think - the median age of the world’s billionaires is 67 years old. Only 10% of them are younger than 50, and over 40% are older than 70. Global billionaire population fell by 3.5% to 3,194 individuals, and their net worth declined by 5.5% to USD11.1 tril in 2022. Read report: Billionaire Census 2023

USD500 mil - the largest unrestricted endowment gift to a higher education institution in American history received by Stony Brook University Endowment. This donation came from The Simons Foundation, the philanthropic organisation of billionaire investor Jim Simons (USD28.1 bil net worth according to Forbes) of Renaissance Technologies (RenTech) that works to advance the frontiers of research in mathematics and basic sciences. The gift is expected to balloon further by up to USD1 bil due to the New York State’s 1:2 endowment matching programme. Crazy facts about RenTech: the firm’s flagship fund Medallion generated an average return of 66% per year before fees (39% after fees*) for 30 years from 1988, racking up gains of more than USD100 bil, one of the largest, if not the largest absolute returns in the industry. Its fee structure is insane as well (but I am willing to pay) - 5% management fee annually and 44% of profits. Unfortunately, the fund has long been closed to its owners and the firm’s employees only. *How does it feel to compound your money 39% annually for 30 years? A RM10,000 investment will turn into RM195 mil - 19,517x your money.

3. IN MALAYSIA 🇲🇾

The Health White Paper is coloured by fierce debates and a foolish commentFierce but healthy views were exchanged in the Parliament regarding the Health White Paper surprisingly from Perikatan Nasional (PN) MPs. In relation to the proposed revision of the public healthcare fee within the first five years of the 15-year public healthcare reform plan,

Pagoh MP Muhyiddin Yassin stated that any proposal to revise the fee should be postponed due to the increased costs of living. Another PN MP from Tanjong Karang, Dr Zulkafperi Hanapi, had a different view. Zulkafperi told the Dewan Rakyat it is reasonable for the Government to increase the fee in order to improve the quality of public healthcare services. Currently, the public need to only pay RM1 for outpatient care and RM5 for specialist outpatient care at public healthcare establishments.

Kuantan MP Wan Razali Wan Nor got his focus on the debate diverted to somewhere else - he said (watch here) that the current attire of the nurse is too tight and shows their body shape. He also took the chance to uplift his party by stating that gambling addiction is a form of mental illness that increases public treatment expenses and that other states should follow PN-led states, such as Kedah, for shutting down 4D gaming outlets.

Nonetheless, the Health White Paper has been passed in the Dewan Rakyat with a majority voice vote.

TGIF but not before you look at these 5 numbers below for you to ponder upon during the weekend

• RM66.3 bil - the total expenditure incurred towards subsidies in 2022. Subsidies on fuel, cooking oil, electricity and chicken & eggs took the most significant portion out of the Federal Government’s subsidy pie.

• RM420 mil - the estimated total costs of the upcoming six state elections in Kedah, Kelantan, Terengganu, Penang, Selangor and Negri Sembilan. Although not an apple-to-apple comparison, the last GE15 cost the taxpayers RM725 mil.

• RM100 mil - the budget allocated for a pilot healthcare project dubbed Madani Medical Scheme (MMS) that will benefit all Sumbangan Tunai Rahmah recipients in 10 districts across the country. Under MMS, eligible individuals and households will receive free primary care services with registered general practitioners (GP) in the vicinity of the 10 districts.

• 29,663 students - the figure confirmed by Deputy Education Minister Lim Hui Ying to be the number of SPM candidates that did not sit for the national exam. It represented about 7.3% of the total number of registered candidates for SPM. The rate is higher than SPM’s figure in 2021, where 6.2% of the candidates had registered but did not sit for the exam.

• 13 - is the number of highways that will implement the open payment system, where you can pay the toll fees using either your debit or credit cards. The main highways including LDP, KESAS, NPE - visit link here to see the full list. Finally good to see the end of Touch ‘n Go’s monopoly is nearing. 

The tale of 3 prominent politicians in Malaysia .

• Anthony Loke - In an interview with BFM Breakfast Grille, DAP secretary-general Anthony Loke revealed that although DAP holds the highest number of parliamentary seats in the current Unity Government (40 seats), the ‘rocket’ party only occupies 4 ministerial positions while BN that won 26 seats, holds 6 positions in the Cabinet. Loke stated that this is the compromise that DAP is willing to swallow in order to prevent Perikatan Nasional, a coalition that does not believe in multiculturalism, from coming into power.

• PM Anwar Ibrahim and ex-PM Tun Dr Mahathir - In the RM150 mil defamation suit against PM Anwar by Mahathir due to the former accusing the latter of enriching himself during his 22-year tenure as Prime Minister, PM Anwar's defence statement, which includes, among others cited that Mahathir allegedly awarded an RM214.2 mil contract to Opcom Cables Sdn Bhd, a company that was controlled by the Mahathir’s dynasty.

Business

1. Cow War: FFB vs F&N. Watch out Farm Fresh. Frase and Neave Holdings Bhd (F&N) is expected to make a big splash in the milk business by investing at least RM1 bil for the development of its integrated dairy farm in Gemas, Negeri Sembilan. The 2,726 hectares farm, once fully operational, will produce 100 mil litres of fresh milk, making the state of Negeri Sembilan literally the milk cow of Malaysia.

2. Perusahaan Otomobil Kedua Sdn Bhd (Perodua) launched its Rahmah Spec (RS) Axia model dubbed Perodua Axia E with a price tag of only RM22,000. This will be the cheapest car in Malaysia, suitable for the B40s and e-hailing drivers with monthly instalment at RM300. Some features absent: no radio, no remote key, manual transmission. Airbags and seat belts of course got. Check out the car here.

3. Malaysia Aviation Group (MAG), Malaysia Airlines System Berhad (MAS) ’ parent company, is rumoured to not continue its on-flight catering service contract with Brahim's Airline Catering Sdn Bhd (BAC) when the contract ends on June 30. If this is true, this will end the 25-year partnership between both entities. According to sources, both parties cannot find a middle ground regarding the terms of the new contract. The national carrier will trust its in-house catering service MAS Awana to assume the responsibility of feeding Malaysia Airlines’ passengers in the future.Nonetheless, both BAC and MAS have a special relationship. Both of these entities own Brahim’s Food Services Sdn Bhd (BFS), where the former holds a 70% stake while the latter holds the remaining shares.

4. The possibilities of MAS’s Borneo rural air service, MASWings to be taken over by the Sarawak State Government became more concrete as the state government had agreed in principle to buy the airliner. However, Sarawak Premier Abang Johari Openg stated that the airliner should be able to make flights beyond Borneo as currently, MASWings only operates regional routes.

4. AROUND THE WORLD 🌎

Twitter sued over music copyrightApart from cleaning up Elon Musk’s mess, Twitter new CEO Linda Yaccarino's first week on the job started with a copyright lawsuit. The National Music Publishers’ Association (NMPA) sued Twitter for violating copyright of songwriters by using their music on its platform without permission. It alleges that Twitter willfully infringed 1,700 songs, and the NMPA is seeking total damages of more than USD250 mil or USD150,000 per song. 

Twitter is one of the only major social media platforms that doesn’t pay licensing fees to music rights holders, unlike YouTube, Facebook, Snap and TikTok which collectively pay the music industry billions per year. YouTube said last year it paid USD6 bil in the previous 12 months, up from USD4 bil the year prior. Seems like not that Twitter didn’t want to pay - they were in talks with the music companies but attention got diverted when Musk took over. 

China’s durian-producing islandChina’s Hawaii, Hainan island, famous for its tropical beaches and mild winter, has now started producing about 2,450 tonnes of durians after 4 years of growing durian trees. Sanya city on Hainan is planning to turn durian production into a key industry and aims to generate RMB5 bil (RM3.24 bil) by 2028. 

From 2017 to 2022, China’s insatiable appetite for durian saw imports grow by nearly 270% from 224,400 tonnes to 825,000 tonnes, reaching USD4.03 bil (RM18.64 bil) in value last year. Durian cemented its position as the king of imported fruit in China in 2022, overtaking cherries in terms of quantity. 

Thailand is currently the largest durian grower in the world, exporting about THB100 bil (RM13.36 bil) in 2021. For comparison, Malaysia’s 2021 export is a rounding error relative to Thailand, with only RM92 mil worth of durians exported. In 2022, this dropped 38% to RM57 mil. Growers in Southeast Asia aren’t concerned with China’s production as the taste is difficult to replicate, giving Chinese-grown figs versus Middle East-grown figs as an example.Watch the high-tech process of growing and harvesting durians here.

Shorts

1. Hong Kong is warming up to crypto. HK’s financial regulator, the Hong Kong Monetary Authority (HKMA), has questioned HSBC, Standard Chartered and Bank of China why crypto exchanges were not being accepted as clients. As the US attacks the crypto industry, Dubai, the UK, Singapore and Hong Kong are establishing themselves as crypto-friendly regimes. 

2. Manchester United is said to negotiate to grant exclusivity to the consortium led by Qatar’s Sheikh Jassim bin Hamad al-Thani in the talks to sell itself for more than USD6 bil. During this period, Man U would not be allowed to negotiate with any bidder other than Sheikh Jassim.  Owning a football club sounds sexy, but is amongst the worst business to own (watch below) alongside airlines and F1 team (caught this reference? If not, email us to ask).

1. Celebrity causing inflation - this is new. In May, Sweden’s inflation was higher than expected at 9.7%, caused by rising prices for hotels and restaurants. An economist attributed this to Beyonce’s world tour in Sweden that sparked a frenzy of demand for hotels and restaurant meals. She performed in Stockholm to a crowd of 46,000 people over 2 nights. Sweden is a small country, so this could be plausible. 

Weekend read: The TikTok SpecialTikTok launched its TikTok Socio-Economic Impact Report 2023 in Jakarta yesterday. Its CEO Shou Zi Chew said the company would invest billions of dollars in Southeast Asia over the next few years to expand its e-commerce business. Some interesting figures shared:

• SEA is one of TikTok’s biggest markets. With a population of 630 mil, 51% of SEA’s population or 325 mil people, visit the app monthly.

• 8,000 employees in SEA.

• Despite the large number of users, TikTok’s e-commerce business is still far behind its peers. It facilitated USD4.4 bil of transactions across SEA in 2022, up from USD600 mil year-on-year (yoy).

• 2 mil small vendors selling on TikTok in Indonesia.

According to research firm Momentum Works (MW) latest report, e-commerce transactions in SEA reached USD99.5 bil last year, up 14% from the year prior and is dominated by 9 platforms, with the top 3 accounting for 86..8% of total volume. Some highlights:

• Dominating the industry is Sea Ltd’s Shopee, accounting for USD47.9 bil, +13% yoy.

• Alibaba’s Lazada recorded USD20.1 bil, down from USD21 bil in 2021. Ranked 2nd largest player in all countries except Indonesia.

• Tokopedia, exclusively serving the Indonesian market, came in at third place with USD18.4 bil. Indonesia is the largest e-commerce market in SEA, accounting for 52% of the region’s gross merchandise value (GMV).

• Singapore and Malaysia ranked top in terms of GMV per capita.Read MW’s report: E-commerce in Southeast Asia 2023

5. FOR YOUR EYES 📺

1. DC Comics The Flash is now out in cinema. Another DC superhero is coming to the big screen this August - Blue Beetle. Seems like the equivalent of Marvel’s Ant-Man, but seems cool though.

1. PM Anwar’s interview with Al Jazeera - “The most corrupt forces are ganging up”.