☕️ EPF 2022 Dividends - Behind The Numbers

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE: EPF EDITION 🔢

Over the weekend, the Employees Provident Fund (EPF) announced the dividends of 2022. We’ve put together a simple infographic for your digestion. Respectable considering the headwinds of 2022.

• Total gross investment income dropped 19.7% YoY to RM55.33 bil in 2022, compared to 2021’s RM68.89 bil.

• Bumiputera and Indian members of EPF were severely impacted by the pandemic as their median savings dropped by 70% and 40%, respectively. As at Dec 2022, Bumiputera members’ had median savings of RM4,900 compared to RM15,500 as at April. Indian members’ median savings declined to RM14,900 from RM25,700 during the same period.

• Total withdrawals in the past two year came to RM145.5 bil, which EPF’s CEO Amir Hamzah Azizan said is bigger than the GDP of some 100 countries and territories.

• Assets under management (AUM) saw its first-ever drop since 1985. EPF’s total investment assets totalled RM1.003 tril in Dec 2022, down 0.7% from RM1.01 tril in 2021.

• Only 3% of members — 350,000 — had achieved the adequate savings threshold of RM600,000.

Bonus: Manchester United got whopped 7-0 earlier in the morning by Liverpool. Watch highlights here.

3. IN MALAYSIA 🇲🇾

Najib Razak and Arul Kanda acquitted from 1MDB power abuse caseJustice Mohamed Zaini Mazlan acquitted and discharged Najib Razak and Arul Kanda Kandasamy from the power abuse case involving the 1Malaysia Development Berhad (1MDB) audit report after the prosecution failed to prove a prima facie case against the accused. The judge, in his judgement, said the items taken out or amended from the earlier audit report would not give rise to criminal or civil liability to the accused. The amendments, as stated by the auditor general (AG) are justified.

Arul Kanda was also granted a certificate of indemnity under Section 63 (3) of the MACC Act — meaning the former 1MDB CEO will not face any more legal proceedings against him from this case. The prosecution will study the decision and consult the attorney general on whether to appeal the case.

FYI, the same judge also found Rosmah Mansor guilty of all three charges of soliciting and accepting bribes of RM194 mil last year in a separate case.

On another note, attorney general Idrus Harun’s tenure has been extended for six months, effective today. Idrus Harun was appointed as the AG on March 6, 2020. Well played, PM Anwar.

Read: meaning of prima facie

The flood situation in Johor, Pahang and Melaka worsened over the weekendThe number of flood victims in relief centres (PPS) in Johor, Pahang and Melaka continued to rise — with Johor seeing 46,742 evacuees, followed by Pahang (3,042) and Melaka (516). Batu Pahat in Johor is the most affected district, with 15,915 victims from 4,616 families.

PM Anwar Ibrahim maintained that there is no need to declare a disaster emergency in Johor as the situation is under control and the weather is seen to be improving. The federal government will also be channelling RM50 mil in immediate flood assistance to the state. PM said the allocation would be used to help flood victims, river management and other urgent requirements. During his visit to Johor, PM assured that flood mitigation projects worth RM600 mil, especially in Johor, will be expedited and need to commence from June this year. Johor Menteri Besar Onn Hafiz Ghazi said three districts — Kota Tinggi, Segamat and Batu Pahat — will be given priority for the flood mitigation plans.

Yang di-Pertuan Agong al-Sultan Abdullah Ahmad Shah wants the government to conduct a detailed study to reduce and address flood risks. His Majesty urged the government to find the root cause and think about the cost later, as there are always floods occurring, every year, every month.

Circus of politics

1. Former PM Tun Mahathir Mohammad said PM Anwar Ibrahim had achieved nothing in the first 100 days. Menu Rahmah is nothing — because Tun M doesn’t care about RM5 meals. Unity Package of RM30 for 30GB lasting for six months is nothing because it doesn’t benefit his friends. PM Anwar Ibrahim visits to neighbours, vice versa, also meant nothing because Tun M is great at diplomatic ties. Perhaps the PM should have attended more weddings and community events.

2. Former PM Ismail Sabri is not going down without a fight. Sabri wants UMNO President Ahmad Zahid Hamidi to show a Registrar of Societies (ROS) letter that approved the party’s no-contest motion for the president and deputy president posts in upcoming internal polls. Zahid said the party is prepared to publish ROS’ approval letter so that all UMNO members are informed.

3. The Terengganu Islamic Religious and Malay Customs Council (MAIDAM) said politicians have been barred from delivering religious lectures or ceramahs in mosques and suraus in Terengganu. Terengganu’s ruler, Sultan Mizan Zainal Abidin, was upset at politicians giving religious lectures and classes and led Friday prayers without the council’s approval. However, PAS leader Abdul Hadi Awang seems defiant — he claimed that Prophet Muhammad also touched on politics in his 'fatwa' (sermons). Hadi said he will continue sermons as usual at the suraus and mosques.

Shorts:

1. The Melaka International Cruise Terminal (MICT) project will likely go on, as the Ministry of Transport (MOT) is in discussions with the Melaka state government. Transport Minister Anthony Loke said the ministry has received an application from the Melaka Gateway developer to revive the cruise terminal project.

2. The private equity firm CVC Capital Partners is mulling to buy a minority stake in KPJ Healthcare Bhd. Johor Corp and EPF own 35% and 13.2% of KPJ, respectively, according to data compiled by Bloomberg. KPJ, which owns more. than 28 specialist hospitals in the country, has a market value of RM4.8 billion. This is the same PE firm that:

   1. Acquired a majority stake in Affin Hwang Asset Management Bhd last year for RM1.54 bil

   2. Acquired 100% stake in homegrown biscuit maker Munchy for RM998 mil in 2018. In a short span of 3+ years, the PE firm flipped the company to Philippines’ Universal Robina (owner of Jack ‘n Jill) for RM1.925 bil.

3. Inspector-General of Police (IGP) Acryl Sani Abdullah Sani said the authorities are already monitoring a local group allegedly involved with the Islamic State (IS) terrorist organisation after a report revealed that the IS has launched a media presence in Malaysia. IGP assured that national security is under control.

4. AROUND THE WORLD 🌎

News out of Russia

• Putin’s secret vodka business empireIndependent Russian news outlet Proekt reported that Russian President Vladimir Putin has secretly been minting a fortune from a vodka brand named after him. The vodka called Putinka vodka was launched in 2002 by alcohol company Winexim and has grown in popularity. The deal was brokered by Arkady Rotenberg, an oligarch with strong connections to Putin, to use Putin’s name. The company has since changed owners multiple times, but the ultimate owner is Putin. Between 2004 to 2019, Putinka made between USD400-500 mil though it is unclear how much of it went to Putin. How did Proekt get hold of this information? A former manager of one of the companies that owned Putinka revealed the information out of disgust with the unprovoked war against Ukraine.

• “War launched against us” - Russia’s top diplomatRussia remains delusional about who started the war. Sergey Lavrov, Russia’s top diplomat and a close ally of Putin, was a speaker at a conference during the G20 Summit hosted by India. Responding to a question from an audience, he started with his answer by saying the war “was launched against us”, before being cut off by loud laughter from the crowd. Russia’s invasion of Ukraine sparked the largest military conflict in Europe since World War II. Amongst the justification given for the invasion by Russia: Ukraine is led by neo-Nazis (but Ukrainian President Volodymyr Zelensky is Jewish and lost family during the Holocaust), the expansion of NATO alliance provoked the conflict but Ukraine is not a NATO member nor was it on track to join the alliance. 

Crypto: FTX’s USD9.5 bil customer ‘hole’, Coinbase acquires a hedge fund

• FTX released a press statement last week on the extent of the company’s deficit. It identified a USD9.5 bil shortfall in top crypto and cash it needed to repay customers and the company only has USD694 mil in easily liquidated assets to repay. How was this hole created? FTX lent USD9.3 bil to Alameda Research, the trading firm owned by disgraced, former FTX CEO Sam Bankman-Fried (affectionately referred to in the community as Sam Bankrupt-Fraud). 

• One of the largest crypto exchanges, Coinbase, has acquired One River Asset Management, an institutional digital asset manager (AUM of USD2.5 bil as at June 2022), as it sets to expand into the business of managing money for big investors like pension funds, sovereign wealth funds and endowments. The asset management business would also provide a steady source of fee revenue compared to trading fee from its exchange business - its revenue from institutional trades collapsed from more than USD300 mil to USD100 mil. Deal terms were not disclosed. The acquired company will be renamed to Coinbase Asset Management. 

Temporary respite for Adani GroupOne of the biggest names in emerging market investing has poured USD1.89 bil into 4 companies of beleaguered Adani Group’s listed companies. Jain co-founded GQG and built it into a USD88 bil powerhouse with investments in various industries. This was announced by Adani Group and led to all 10 of Adani Group stocks to climb, gaining a total market cap of USD8 bil, the biggest increase since Hindenburg Research released its report on 24 Jan alleging stock manipulation and accounting fraud at Adani Group. Before this recovery, Adani Group stocks have lost USD153 bil. 

India’s highest court on Thursday set up a 6-member independent panel to investigate the report and it has instructed the Securities and Exchange Board of India (SEBI) to look into any stock manipulation of Adani Group and report its findings in 2 months. 

Shorts:

1. The Repulican-led US state of South Carolina has proposed a bill that will make abortion a crime punishable by death sentence, a crime as guilty as committing homicide. This comes following a controversial decision by the US Supreme Court overturning Roe v Wade last year, undoing nearly 50 years of legalised abortion nationwide. 

2. Chocolate brand Toblerone will soon lose its image of the Matterhorn mountain peak on its packaging as the brand’s US owner is moving some production out of Switzerland. Under Switzerland Swissness Act passed in 2017, national symbols and Swiss crosses are not permitted on the packaging of products that don’t meet Swissness criteria. In this case, foodstuffs are only “Swiss made” if it has at least 8)% of the product’s raw materials coming from Switzerland and 100% for milk and dairy products. Read: The ‘hidden’ bear in Toblerone logo explained

3. Thailand’s Ministry of Public Health disclosed how much it spent on public health during the 3 years of the pandemic to contain the spread of the virus and vaccinating the population. Of the total THB444 bil (RM57.7 bil) spent, THB260 bil (RM33.8 bil) or 58.6% went towards testing costs and treating people for Covid-19. Vaccine procurement and distribution expenses accounted for THB78 bil (RM10.14 bil). The government also borrowed THB1.5 tril (RM194.9 bil) to stimulate the economy and partly cover the cost of emergency public health services. MOH, can disclose this breakdown?

5. FOR YOUR EYES 📺

1. We breakdown the business model of “pajak gadai”/pawnbroking by analysing Bursa’s first and only listed pawnbroking company, Pappajack Holdings Bhd

2. What ever happened to the angry birds?

3. Throwback when Jacky Chan was satay-ing in Kuala Lumpur. He was in town to shoot Police Story 3: Supercop in 1992. Watch the KL scene of the movie here. Also, give Malaysia Time Tunnel a follow on Instagram - a collection of nostalgia and memories of Malaysia’s past.