☕️ EPF reports distributable income of RM36.7 bil for 1H24, 29% increase YoY

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

AirAsia has significantly increased its flight frequencies, now operating 3,281 weekly flights across 10 ASEAN countries. AirAsia Malaysia operates almost half of those flights — 45%. This expansion aims to support tourism and economic growth in the region. In 2023, AirAsia Group transported over 61 mil passengers, with more than one-third of them travelling within ASEAN.

Condominium prices in central Tokyo continue to surge, with some units now selling for over three times their original prices from a decade ago. This increase is particularly noticeable around redevelopment areas, attracting strong interest from foreign investors due to Tokyo's relative affordability compared to other major global cities. According to Tokyo Kantei, as of June, properties near Tokyo Metro's Roppongi-itchome Station were priced 3.69 times higher than their original prices, while those near Higashi-ikebukuro and Shin-ochanomizu stations were over three times higher.

A U.S. court has ordered the bankrupt cryptocurrency exchange FTX to pay USD12.7 bil in relief to its customers, following a settlement with the Commodity Futures Trading Commission (CFTC). FTX has committed to repaying customers 100% of their claims based on account values at the time of the bankruptcy in late 2022. The CFTC agreed not to collect any payment from FTX until all customers are fully repaid with interest, removing a potential obstacle to the customers' compensation.

3. IN MALAYSIA 🇲🇾

Crimewatch Malaysia

1. Foreign money laundering boss has local accounts frozen

   The PDRM’s anti-money laundering force has frozen the local financial assets of a foreign online gambling boss worth some RM300 mil following a tip-off. A central depository system account with stocks worth RM281 mil, an escrow account worth RM18.6 mil, and RM58,048 in two local bank accounts were frozen by the authorities. The police believe the suspect earned RM14.1 bil between 2012 to 2020. Interpol was alerted, and the suspect is now on Red Notice for illegal gambling and money laundering.

2. Murder in Tawau

   Thirteen students aged between 16 to 19 from the Lahad Datu Vocational College pled not guilty to the charge of murdering their college mate, Mohamad Nazmie Aizzat Mohd Narul Narul Azwan, 17, in March, with the teens claiming trial. Initial investigations found the victim was beaten up because he was suspected of stealing RM85 that two of the thirteen accused said was missing.
   
   In a separate incident in Tawau, a 14-year-old Indonesian youth pled not guilty when accused of murdering his Indonesian girlfriend, claiming trial to the charge of killing Nur Zahirah Safaruddin, 13, at the Murni Sdn Bhd Plantation in January last year.

3. Investment scams abound

   A 33-year-old jobless man from Kedah claimed that he lost RM174,270 to a fake investment scheme after his friend introduced him to the Pt Sentratama Investor Future foreign exchange scheme in 2018. He made an initial investment of RM10,000, for a total of 21 transactions leading to the final amount. He lodged the police report after the promised returns never materialised, and investigations revealed the scam. 

   Meanwhile, police have taken down a separate scam syndicate that had conned victims out of RM21.9 mil. Ten people were arrested in simultaneous operations across multiple states, with 20 bank accounts frozen. The ten arrested are believed to be the owners and directors of the companies involved in the syndicate’s scam.

Political Plays

1. Mahkota by-election polling day set, unity govt to field BN candidate

   The Election Commission has set 28 September as the polling day for the Mahkota by-election in Johor, with 14 September set as Nomination Day. A 14-day campaigning period has been set, with candidates appealing to 66,318 voters. According to DPM Ahmad Zahid Hamidi, the candidate from the unity government will be from BN, stating it is customary for the party that holds the state or parliamentary seat to contest it again. The seat fell vacant after the death of Kluang Wanita Umno chief Sharifah Azizah Syed Zain on 2 August.

2. Amirudin “more comfortable as MB”

   The Selangor Menteri Besar stated he is more comfortable leading the state government, reaffirming his commitment to the effective implementation and continuation of the First Selangor Plan. He also stated that he has not been informed, nor have there been any indications, that he was being considered as a Cabinet minister. PM Anwar Ibrahim has also denied again that there is no impending Cabinet reshuffle, and that he was unaware of any plans for such. Several ministers, speaking on condition of anonymity, also stated that the first they heard of this reshuffle was from a report quoting a “well-placed source”.

Business Highlights

1. EPF reports distributable income of RM36.7 bil for 1H24

   The fund reported a 29% increase in total distributable income for the period, citing better market conditions and higher contributions from equity investments, but does not include mark-to-market gains of securities that have not been realised. RM31.34 bil was generated for Simpanan Konvensional, with the remainder RM5.36 bil for Simpanan Shariah. EPF’s assets under management also grew to RM1.21 tril as of the end of June. View EPF’s full announcement here.

2. Sunway enters ranks of MSCI constituents

   The August review of the MSCI Malaysia Index saw Sunway Bhd added to the Index, with no constituents deleted. MSCI Malaysia now has 32 constituents which make up about 85% of Malaysia’s equity universe before Sunway was included, with the next review scheduled for November. For the Small Cap Index, the following six were added: Aeon Credit Service (M) Bhd, Dayang Enterprise Holdings Bhd, Genting Plantations Bhd, Guan Chong Bhd, ITMAX System Bhd, and Sunway Construction Group Bhd. Inclusions to these indices could trigger investment inflows as passive investors adjust their portfolios to consider the additions.

3. Mr DIY makes strategic investment in lifestyle retail chain KKV

   CEO Adrian Ong said the move, which aims to allow KKV to open more outlets across the country, is expected to drive sustainable profitability growth by attracting a broader customer base while enhancing the overall shopping experience. The investment was announced with the group’s second-quarter results, where the retailer saw a revenue of RM1.2 bil and a net profit of RM155.2 mil, citing contributions from new stores. Transaction volumes also increased 13% to 46.2 mil, offset by lower average basket sizes from lower items per basket, which the group believes is due to tightening household spend. Mr DIY is also expanding its footing in retail by making a strategic investment in the KKV retail chain. KKV is a popular lifestyle store chain from China featuring a wide range of lifestyle products, catering to a young and trendy demographic. View earnings here.

Shorts:

1. RM500k reward for Malaysian Paralympic gold medalists
   The Sabah government is offering the reward to state athletes who win a gold medal in the upcoming Paris Paralympic Games. Sabah is fielding three athletes who will be representing Malaysia in the men’s long jump, men’s 100m, and badminton events. Malaysia is fielding 29 para-athletes in the upcoming games.
   Malaysia has won a total of 16 medals at the Paralympic Games since 1972: 6 gold, 4 silver and 6 bronze. Go go Malaysia!

2. Lorry driver hurt after diesel leak ignites near Jalan Duta toll
   The driver sustained injuries to his head and hand after his overturned lorry caught fire. Couple of vehicles that drove past the lorry caught fire but fortunately extinguished itself (watch here - looked a bit like an action movie scene). The accident happened near the Jalan Duta toll plaza, and authorities dispatched a fire engine and a water tanker to extinguish the fire. The cause of the fire is currently being investigated.

4. AROUND THE WORLD 🌎

Officials at UN Security Council seek reform on its structure and to assign Africa a permanent seat
A sliver of hope for a better representation at the UN (and hopefully restrengthening its credibility) — UN’s Secretary-General Antonio Guterres, in an address to the UN Security Council (UNSC) on Monday, has called for a reform of its outdated structure and to assign Africa a permanent seat at the table.

Stressing that the continent is underrepresented, Guterres said the composition of the UNSC has failed to keep pace with a changing world and currently lacks a permanent voice for a continent of well over a billion people that is Africa.

The 15-member UNSC consists of five permanent members with veto power – China, France, Russia, the US and the UK (some of the permanent members don’t seem relevant today) – while the remaining 10 non-permanent seats are allocated regionally. Africa demands two permanent seats in the UNSC and two additional non-permanent seats, as well as an abolishment of the veto.

Donald Trump comeback interview on X aired despite hit by “massive” technical glitch
1.2 mil people tuned in to what was marketed as “the interview of the century” chit-chat between US Republican presidential nominee Donald Trump and Elon Musk, only to wait a good 40 minutes before it started, due to what Musk claimed as a massive “cyberattack” on the platform.

Musk, who publicly endorsed Trump’s campaign for re-election repeatedly showed his stance on Trump in the chat that lasted nearly two hours where they talked about many topics including Trump’s rivalry with Kamala Harris, the EU, and China, to name a few.

Interestingly Trump was once permanently suspended from Twitter (before it became X) due to risks of violence incitement after hundreds of his supporters stormed the US Capitol in 2021. Musk took over Twitter in 2022 and restored Trump to the platform shortly after.

It’s quite clear that Musk is taking the opportunity to exert his influence on US politics through the chat, while Trump on the other hand, besides a channel for his campaign, took the opportunity to send messages on his intention to “strengthen” relationships with leaders of the countries that he described as “axis of evil” : China, Russia, Iran and North Korea.

Long way to go for AI, humans still not fully trusting the technology.
A study published (view here) in the Journal of Hospitality Marketing & Management in June found that despite its rapid advancements in recent months, describing a product as using AI does lower a customer’s intention to buy it. 

The study was conducted across various age groups where their response towards items powered with AI are measured based on their willingness to buy. Study authors reported that the majority of the subjects rejected the items, due to various reasons related to trust and transparency.

Consumers seem to fall back on emotional trust due to limited understanding of the inner workings of AI, fear of the unknown and the perceived risk of how it handles users’ personal data. They also mentioned that Hollywood science fiction films casting robots as villains also have an impact on how AI is perceived.

Funny that many still don’t realise that AI was already present in our lives way before ChatGPT became a big name.

Shorts

1. Starbucks appoints new CEO, Chipotle's Brian Niccol

   Starbucks has named a new CEO yesterday, in its efforts to fend off mounting pressures from Elliot Investment Management who wants them to improve performance and stock price, expand its board and improve its governance. The new CEO is Chipotle’s Brian Niccol, who has now replaced Laxman Narasimhan who joined Starbucks in 2022 in its effort to reinvent itself. Unfortunately, Starbucks stocks have continued to suffer, losing roughly 20% of its value over the last five years when the broad-market S&P 500 has gained more than 80%. In July, the company fell short of sales expectations due to weakening demand in the US and China. The fate of the share prices upon this news: Starbucks up 20%, Chipotle down 10%.

2. Ecstasy drug rejected by FDA for use in PTSD therapy 

   The US Food and Drug Administration (FDA) has rejected the psychedelic drug MDMA, aka ecstasy to be used as part of the treatment of PTSD, due to insufficient clinical data and doubts whether psychotherapy contributes to PTSD treatments and if it is even necessary. Lykos Therapeutics, the maker of the drug, expresses frustration over the setback. They do acknowledge the use of hallucinogenic drugs is a “novel” idea, but it is a welcomed progress, especially considering that PTSD patients have not really seen any new treatment options in over two decades.

3. There’s water in the deep Martian rocks

   Exciting news from Mars — Scientists have discovered a reservoir of liquid water in the depth of its rocky outer crust, at a depth of about 10 to 20 km. The discovery was made by NASA’s Mars Insight Lander, which touched down on Mars in 2018 and stayed quietly for 4 years, listening to the vibrations of Mars using its seismometer. However, it does not mean that humans can now easily colonise the Red Planet - drilling a hole that deep into the crust is not an easy feat even for Elon Musk. Nevertheless, it does mean that there’s more to discover in terms of evidence of life.

5. FOR YOUR EYES 📺

1. Some countries go to great lengths to drive their fertility up. In Japan, parents get a combined up to 800 days of paid leaves for a childbirth.

2. Athletes with the most Olympic medals 

3. Language-learning app Duolingo just crossed an important milestone: 100 mil monthly active users (MAU). The company also reported its fifth consecutive profitable quarter, generating USD190 mil in bookings and over USD24 mil in net income (view here). Duolingo is listed (so you can invest in its shares if you believe in it), with a market cap of USD8.34 bil.