☕️ DAP's growing fear of losing its 'safe deposit', Penang

1. NUMBERS AT A GLANCE 🔢

USD532 bil (RM2.42 tril) — the total amount of cash held by Asia’s top 10 cash holders, or a staggering 40% of the total Asian cash balance at the end of end-2022. Malaysia’s Petroliam Nasional Bhd (Petronas) is among the top 10 companies in the list. The other nine companies comprised 7 from China and 1 each from Taiwan and South Korea.

39 mil — the number of people globally living with human immunodeficiency virus (HIV) that causes acquired immunodeficiency syndrome (AIDS). The United Nations insisted that “The end of AIDS” is still possible by 2030 as it’s a matter of political and financial choice. However, funding for HIV fell to USD20.8 bil in 2022 — around the same level as in 2013 and well short of the USD293 bil needed by 2025.

USD279,802 (RM1.27 mil) - the median compensation of a Google employee in 2022 that includes base salaries, equity and bonuses. This is based on a leaked spreadsheet obtained by Insider, which includes data voluntarily submitted by over 12,000 US employees. Despite being pretty well paid, an internal Google survey indicated that just 60% of its workers felt their pay was “fair and equitable”, down from 66% in 2021.

3. IN MALAYSIA 🇲🇾

Election things

• DAP losing Penang, for the longest time a ‘safe deposit’, is starting to feel like a real possibility to DAP. Citing several unspecified surveys, DAP secretary Lim Hui Ying claimed that a significant number of Chinese voters could vote for PN, cast spoilt votes or simply not turn up on polling day. Penang DAP chief and caretaker chief minister Chow Kon Yeow echoed Lim’s concerns and said this sentiment cannot be taken lightly. A bit late to address the discontent? 

• MIC, a BN component party, and its leaders have made a pledge in front of the PM Anwar to fully support the leadership of the PM for a full term during a special meeting with the PM at MIC HQ. Interestingly, Astro AWANI journalist Firdaus Azil tweeted (or X-ed, or whatever the new verb is) that MIC president SA Vigneswaran didn’t mince his words and told the PM that he trusted the PM “because there’s no one else to trust”. Who else was present? Deputy PM Ahmad Zahid Hamidi, who is also BN chairman and UMNO president. Vigneswaran also told PM Anwar that he has a lot to say but couldn’t due to the unexpected attendance of BN’s boss, Zahid Hamidi. 

• Despite the Yang di-Pertuan Agong’s call for political stability, PN still isn’t giving up hope to take over the government — the federal government that is. PN Youth head and Pasir Mas MP Ahmad Fadhli Shaari said the Federal Constitution has many ways to facilitate this change, and the key to doing so is PN winning Selangor. He suggested UMNO MPs might jump ship. There’s anti-hopping law in place in case he forgot — he did not explain how this law could be overcome. 

RM1 bil redevelopment of KL Sentral Station approved by cabinetTransport Minister Anthony Loke announced that the Cabinet has approved the ministry’s proposal to redevelop the KL Sentral Station. This is to cater to the increasing number of commuters and traffic volume at the city’s central transportation hub, which sees about 200,000 daily commuters. Its current capacity is about 100,000. 

Some key points:

• Zero financial implications for the government. Developer Malaysian Resources Corporation Bhd (MRCB) will bear the redevelopment cost, which is expected to be more than RM1 bil. What’s in it for MRCB then? MRCB will have the right to build commercial spaces above the station, indirectly recouping its investment,  but only could do so after the redevelopment is completed — this is among the conditions set by the government. 

• Public transportation operations will not be disrupted during the redevelopment.

Shorts

1. New vehicle motorists can thank Transport Minister Anthony Loke and team for making their lives easier. Effective 15 Sep, any individual who holds either a motorcycle or motorcar driving license and wishes to obtain a different class of license is exempted from taking the theory test twice

2. Case close in the mosque incident involving Communications and Digital Minister Fahmi Fadzil. Selangor Police Chief Hussein Omar Khan said that there was no element of a political campaign in the speech delivered by the minister in a mosque and he was explaining the issue related to The 1975 band after reviewing the 12-minute video recording to Fahmi’s speech at the mosque. 

Business spotlight: PE firm Creador’s IPO pipelineFresh off the acquisition of Caring Pharmacy for RM850 mil together with BIG Pharmacy, Brahmal Vasudevan, CEO and founder of private equity firm Creador Capital Group shared his plans for his firm and its investments in an interview with Bloomberg. Creador has earlier successfully listed MR DIY and CTOS.

On Creador’s portfolio

• Next in line to the list is budget retailer Eco-Shop Marketing Sdn Bhd. With sales close to RM2 bil and profits north of RM100 mil, it is in the process of listing in Q2 2024. 

• Tealive is expected to list in Q4 2024. Creador acquired a 30% stake in 2021 for a reported price range of RM200 - 260 mil, valuing Tealive at least RM667 mil. 

• Creador has convinced its latest investment, Malaysian pet food maker Pet World International to choose to list in Malaysia over our neighbour across the straits, Singapore as there’s a lot of captive capital here, good valuation multiples and high demand from local institutions. Creador owns a 40% stake in the company, acquired back in June. 

• Caring Pharmacy and BIG Pharmacy will take a year to consolidate and will result in a combined annual sales of an estimated RM2.5 bil. IPO for the pharmacy chain will be pursued sometime in 2025 or 2026. 

• View Creador’s portfolio list here.

On Creador, the firm

• Since its inception in 2011, Creador has raised USD2.15 bil and invested about USD2 bil. 

• The fund has returned about 20% annually in dollar terms to investors. Back-of-the-envelop calculation shows RM1 invested, compounded over 12 years, will grow to RM8.92, giving a cumulative return of 792%.

• 70% of its capital is invested in Malaysia, with the remaining invested in India. Its investors include development banks, family offices, university endowments and insurance companies.

4. AROUND THE WORLD 🌎

Trump’s Indictment HattrickFormer US President Trump now faces his third indictment for trying to overturn the results of the 2020 presidential election in order to cling to power.

The four felony charges in this indictment include:

• one count of conspiracy to defraud the US

• one count of conspiracy against rights

• one count of conspiracy to obstruct an official proceeding, and

• one count of obstructing an official proceeding.

The most damning evidence against Trump will actually be the notes taken by Trump’s former vice president Mike Pence. The notes were repeatedly cited in the indictment due to the details in the conversations recorded. One of the challenges faced by the indictment is proving that Trump knew he lost the 2020 election and still tried to overturn the result, and Pence’s notes could be used to show Trump already knew he had lost. Pence is now Trump’s opponent in the 2024 Republican party presidential primary race.

Trump now faces a total of 78 charges with a total jail time of 641 years over the three indictments, with a legal bill of USD40 mil that is growing by the day. The legal fees were borne by the political action committee Save America, but the committee recently requested a refund on a USD60 mil contribution made to another group, signalling a potential money crisis for Trump.

Fitch downgrades US credit rating, US disagreesRating agency Fitch downgraded the credit rating of the US from AAA to AA+, with the US government disagreeing with the downgrade. The agency expects the US to face fiscal deterioration over the next three years while being burdened by growing general government debt.

US Treasury Secretary Janet Yellen called the downgrade “arbitrary and based on outdated data”, namely a reduced governance score given during the Trump administration. Another senior official described the rating as a “bizarre and baseless” decision. The downgrade led to US stocks opening lower, though there was little change to the US dollar. With federal debt of more than USD32 tril and interest payment of USD3 bil PER DAY estimated by 2023, there’s some solid data there for Fitch to justify its downgrade.

IPO values Birkenstock at over USD8 bilL Catterton, the owner of Birkenstock, will launch an IPO for the footwear brand, which values it at over USD8 bil, with a chance of pushing it to as much as USD10 bil. Luxury conglomerate LVMH-backed L Catterton is working with Goldman Sachs and JPMorgan Chase to list Birkenstock. Still, deliberations are ongoing, with no final decisions on the size or timing of an IPO as yet. Last year, Birkenstock saw a 29% rise in revenue for a total of EUR1.2 bil and adjusted earnings of EUR394 mil.

AI: Shows promise in detecting cancer, Rakuten signs MoU with OpenAI

• A study by a team of researchers at Sweden’s Lund University found that AI shows promise in reading breast cancer screening images, being able to spot cancer at a “similar rate” to two radiologists. The team noted that more research was needed to determine whether or not AI detection could be used in screening programs. While not the first study about the use of AI in diagnosing breast cancer in mammograms, it is the first to pit AI-supported screening against standard care, represented by two radiologists.

• Meanwhile, Japan’s Rakuten Group has signed a Memorandum of Understanding with ChatGPT owner OpenAI to explore commercial opportunities together. The two companies will look into integrating AI services into Rakuten’s products and services, with OpenAI providing Rakuten with priority access and support to its APIs.

Shorts:

• Billionaire plans to fly killer whale to freedom with cargo plane – Billionaire philanthropist Jim Irsay is backing a USD20 mil plan to free Tokitae, the orca from the Miami Seaquarium, which has been in captivity for 53 years and living in the world’s smallest orca enclosure. The plan involves loading the whale on a large cargo plane with her carers, flying across the US, and then taking it to a 15-acre netted area near the San Juan islands in hopes of reuniting with Tokitae’s mother, who is thought to be alive near the netted enclosure.

• Despite the country's cryptocurrency ban, China remains Binance's biggest market – Despite the ban on crypto in China by the People’s Bank of China in September 2021, the 5.6 million accounts in the country, of which almost 1 million are active, traded crypto assets worth USD90 bil in May alone, making it Binance’s biggest market by far. 

• Dua Lipa faces lawsuit over hit single Levitating – The copyright claim was made by musician Bosko Kante, who claims Dua Lipa used a recording made with Kante’s talk box in remixes of the song without his permission. A talk box is a wearable device that makes vocal vibrations sound like musical instruments. The lawsuit claims that Kante is entitled to more than USD20 mil.

5. FOR YOUR EYES 📺

Yesterday, we shared how 4 Nigerians survived a 14-day journey crossing the ocean on a ship’s rudder. Just in case, here are survival guides:

1. In the ocean (don’t drink seawater or your pee)

2. In the jungle

3. In the city — use Google Maps, or put your phone down and try interacting with people around you and ask.