☕️ KL20 Action Plan to boost Malaysia’s startup ecosystem

1. MARKET SUMMARY 📈

Foreign investors offloaded RM1.59 bil in local equities last week, making it the highest weekly net outflow in 4 years since the country entered into MCO and also the eighth consecutive week of net selling by foreign investors, according to MIDF. On the other hand, local institutions scooped up a net purchase of RM1.79 bil last week, a 6-year high since Feb 2018.

2. NUMBERS AT A GLANCE 🔢

More on the ornamental fish industry. A total of 1.5 mil arowana worth RM78 mil were exported last. year, according to the Fisheries Department. The types exported include hybrid, red, gold and albino, which are highly popular in China, Taiwan, Hong Kong and Japan. Perak is the top exporting state of arowana in the country. The other states that are active in producing the fish on a large scale are Johor, Melaka and Selangor.

India’s election is now ongoing and its existing PM Narendra Modi, has been good — only for the rich. During his decade-long in power, the richest 1% (about 9.2 mil people) now owns 40% of the country’s wealth and 22.6% of total income — the highest share since data going back to the 1920s. This is according to a new study by economists, including renowned inequality expert Thomas Piketty. The growth in inequality comes at the expense of the middle class. Although the inequality gap widened after the economy opened up in the 1990s, the period between 2014 and 2023 saw a pronounced rise in top-end inequality in terms of wealth concentration. This period coincided with Modi’s ascension to power and the growth of India’s billionaire class. Based on figures from the World Inequality Database, India’s income inequality is among the very highest in the world.
View study: Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj

Only 27 songs in history have debuted at No.1 on the Billboard Hot 100, widely considered the definitive all-genre singles chart in the US, and stayed there for a second consecutive week. Kendrick Lamar’s “Like That” is the most recent song to achieve this feat. Mariah Carey, Taylor Swift, Ariana Grande and BTS all have more than one entry on this list. The odd one on the list? “Harlem Shake” by Baauer. Do you remember this song that inspired the viral dance trend in 2013? (if you are too young to remember, watch it here) This song made it onto the list following the Hot 100’s change in methodology to incorporate digital sales data in 2005 and YouTube data in 2013.

3. IN MALAYSIA 🇲🇾

KL20 Action Plan to boost Malaysia’s startup ecosystem
Economy Minister Rafizi Ramli introduced the KL20 Action Plan to position Malaysia among the top 20 global start-up ecosystems by 2030 – a plan with a range of incentives and initiatives for venture capital (VC) firms and tech companies. To sum it up:

• Incentives for VC Firms and Tech Companies: Rent and employment pass subsidies, concessionary corporate tax rates.

• VC Golden Pass: Expedited registration, subsidised office space and access to funding opportunities for global VCs. More below.

• Unicorn Golden Pass: Designed to attract global unicorns by offering perks such as employment pass fee exemptions for senior management, subsidised rent, and a start-up concierge service.

• Investment Commitments: Khazanah Nasional Bhd announced RM1 bil National Fund-of-Funds for local start-ups. Another RM3 bil investment in SEA and Malaysian ecosystems under the ASEAN Investment Initiative by Khazanah, KWAP, and BlueChip Venture Capital.

• Infrastructure Development: Plans to build SEA’s largest integrated circuit (IC) design park by Selangor Information Technology and Digital Economy Corporation, with technology licensing from SoftBank-owned British company Arm to advance Malaysia's semiconductor industry.

SC’s VC Golden Pass
The Securities Commission Malaysia (SC) is introducing a VC Golden Pass to expedite the registration process for international VCs, reducing it from six weeks to two weeks. This initiative is part of a broader effort to attract global VCs and improve the efficiency of employment pass issuances for non-Malaysian personnel. Additionally, the SC's development arm will launch a specialised training program for VC professionals. The SC is also finalising a 5-year roadmap to enhance capital market access for micro, small, and medium enterprises (MSMEs) and mid-tier companies, focusing on collaborative growth and sustainable development initiatives.

National Plastic Policy in the making
According to Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad, a national policy on plastic production, consumption, and disposal in line with the Global Plastic Treaty (GPT) is in the works. Ongoing plans include the Malaysian Plastic Sustainability Roadmap (2021-2030) and the Malaysian Roadmap Towards Zero Single-Use Plastics (2018-2030). Additionally, he has called for a review of existing laws to strengthen the country's efforts against plastic pollution. Nik Nazmi emphasised the role of collective public effort in moving towards reusable alternatives and minimising plastic use. Sure, we can keep using paper straws, but first, make big corps reduce THEIR plastic waste.

Malaysia ranked 5th in the list of top 10 countries that throw the most plastic waste and rubbish into the ocean, making us one of the worst offenders in plastic waste management. Each Malaysian is guilty of mismanaging 25.49kg per year, according to research done by Utility Bidder (UB). Mismanaged plastic waste is defined as waste that is littered or disposed of in uncontrolled landfills, significantly increasing the risk of it entering the ocean. Malaysia is one of the biggest plastic manufacturers globally, but we lack the capacity to deal with the waste (other than landfills and open burning, which is SO harmful). Small-scale reducing and reusing is insignificant when corporations continuously mass-produce plastics. However, we still need to do our best as individuals to reduce our waste. Experts suggest reusing cups, bottles and shopping bags, buying essentials in bulk and reducing chewing gum as it contains plastic. Bring your own coffee cup the next time you get coffee.

A 10 and 9-year sentence sought for Swiss ‘supporting actors’ of the 1MDB scandal
Lawyers for Tarek Obaid and Patrick Mahony, accused of embezzling USD1.8 bil from 1MDB, began their defence in Switzerland's Federal Criminal Court. The Swiss state prosecutors charged them with collaborating in a massive embezzlement scheme led by Jho Low. Describing the crime as the "scam of the century”. Prosecutors are seeking lengthy jail terms for both—10 years for Obaid and nine years for Mahony. They also proposed detaining the duo to prevent potential flight risks. Funny. Even Najib’s supporting actors are facing a higher sentence. Meanwhile, we’re talking about prison term discount house arrest for the man himself.

Interesting court cases

• Secret recordings admissible in dismissal cases
  The Industrial Court in Kuala Lumpur has ruled that even if illegally obtained, secret recordings of meetings can be admitted as evidence in dismissal cases if they are relevant to the facts in dispute. In a case involving Agarcorp Sdn Bhd, Chairman D Paramalingam dismissed objections regarding the admissibility of a secretly recorded conversation – stating that strict evidence rules of civil and criminal courts do not bind the court’s proceedings under the Industrial Relations Act 1967.

  The recording was crucial to prove that the dismissed employee, identified as Jagen, was involved in activities that directly competed with Agarcorp through a company associated with his brother, leading to a conflict of interest and serious misconduct. Consequently, the court upheld the dismissal, citing the proportionality of the response to the misconduct and emphasising the irreparable damage to the trust and confidence placed in Jagen by his employer.
  Read: Can a secretly recorded confession really be used in Malaysian court?

• Postnuptial says the husband can keep a mistress
  KL High Court validated a postnuptial agreement, allowing the husband to maintain a relationship with a mistress during their marriage. Justice Evrol Mariette Peters ruled that such agreements between non-Muslim spouses are recognised under Malaysian law, provided that they don’t violate any existing laws. The agreement was signed voluntarily by the wife, indicating her acceptance of the husband’s extramarital activities within set boundaries. The couple filed for divorce in 2021, and the court concluded that the marriage had naturally run its course, influenced by financial stability and convenience rather than affection, and granted a divorce with immediate effect. The wife’s claim for damages was dismissed due to insufficient proof of adultery. How do you prove adultery if you’ve already allowed him a mistress?
  Read: Prenups and postnups in Malaysia

If you so happen to be experiencing any OR both of the situations above, get a lawyer to advise you. The above additional links shared are for informational purposes only. 

4. AROUND THE WORLD 🌎

In and about China

• Chinese SWF saves the CSI300 blue-chip index
  Chinese sovereign wealth fund Central Huijin Investment bought blue chips worth at least RMB300 bil (USD41 bil — that’s about 1 Maybank + 1 Public Bank) in the first quarter in a bid to shore up the sliding stock market, helping the CSI300 blue-chip index to bounce back roughly 14% from five-year lows hits in February. The rebound was also supported by a series of market-friendly policies and the replacement of China’s top securities regulator.
  Learn: What is a blue chip?

• The Chinese 008 - 2 men charged in UK for allegedly spying for China
  A UK parliamentary researcher and another man have been charged with spying for China after allegedly providing information which could be “useful to an enemy”. Christopher Cash, 29, the researcher, and Christopher Berry, were charged under the Official Secrets Act and accused of giving “articles, notes, documents or information” to a foreign state. The researcher is understood to have access to Conservative MPs and the security minister Tom Tugendhat and foreign affairs committee chairwoman Alicia Kearns. Counter-terrorism police said the allegations were “very serious” after involving an “extremely complex investigation”. China has slammed the allegations of “malicious slander”. 

Israel vs Iran - could have been worse
Israel initially planned for a much more severe counterstrike on Iran but dialled back after intense pressure from its allies, including US President Joe Biden and British and German foreign ministers, the New York Times reported. The group urged Israeli PM Benjamin Netanyahu to show restraint and told him to consider the successful defence against the Iranian attack as a victory that required no further escalation. The planned counterstrike was in response to Iran launching more than 300 missiles and drones at Israel, of which 99% were intercepted. Israel’s strike on a military base near the Iranian city Isfahan might just be enough to send Iran a message - it shows the sophistication of Israel’s military capability, having executed the strike without sending a fighter jet and penetrating Iran’s air defence systems. 

Meanwhile, China is taking notes on Iran’s failed attack to figure out how it could get past the tech and alliance that foiled the attack, sponsored by the US, according to Rupert Hammond-Chambers, the president of the US-Taiwan Business Council. Much like Israel, Taiwan expects to be able to rely on the US in case China pulls the trigger and invades Taiwan. 

The not-so-magnificient Tesla 
Tesla, one of the seven magnificent tech stocks, isn’t having a great 2024. A bad one in fact. Its stock slid 4% to a 52-week low yesterday, extending its year-to-date (YTD) decline to 43% after slashing prices over the weekend. Tesla’s market cap now stands below USD500 bil at USD446 bil. Recap of its bad times this year:

• As competition surged and it faces falling sales, Tesla slashed prices in key markets, including the US, China and Europe. Malaysia wen?

• Tesla also slashed its Fyll-Self Driving feature by one-third to USD8k from USD12k.

• A 10% global layoff of its 140k workforce was announced last week.

• Last Friday, Tesla recalled 3,878 Cybertrucks over faulty accelerator pedals. That’s essentially every Cybertruck shipped to customers since launch. 

• First-quarter deliveries missed Wall Street estimates. Tesla reported its first year-on-year decline in sales since early 2020, and its quarter-on-quarter sales declined about 20%. 

• China’s BYD and Li Auto are also quick to catch up with Tesla. Li Auto announced price cuts over the weekend, matching Tesla’s. Tesla’s market share in China fell to 6.7% in Q4 of 2023, compared to 10.3% at the beginning of 2023. 

Tesla is set to report its first-quarter earnings today. If the above is any indication, it's going to be kind of ugly. 

Prime Tokyo real estate on discount - accounting-wise
The hidden value of Tokyo’s largest skyscrapers is now attracting activist investors. By one estimate, the gap between how companies record their real estate assets on their books versus what they could fetch in the market is estimated at around USD142.5 bil (RM681.5 bil), or 50% higher. This is due to a common accounting practice. Japanese companies have held these properties for decades, each year writing down the value of the fixed asset due to depreciation, but did not revalue it on its books as property prices soared. 

Activist investors now believe billions can be unlocked by taking a stake in such companies and pressuring them to sell off these holdings that are not core to the companies’ actual businesses. There are about 700 publicly traded Japanese companies with property leasing as part of their operations, but only 55 of them are in the real estate business. 2024 marks the year Japan becomes one of the world’s hottest markets for activist investing as government agencies and institutions like the Tokyo Stock Exchange are encouraging companies to better manage their balance sheets.

5. FOR YOUR EYES 📺

1. Deadpool & Wolverine (Ryan Reynolds x Hugh Jackman) trailer is out. Coming to theatres this Jul 26.

2. Ever wondered how cranes are erected?

howmechanicswork

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