☕️ Malaysia is in the fast lane for BRICS membership

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

UBS Global Wealth Management has raised the likelihood of a US recession to 25%, up from 20%, due to slower job growth and concerning unemployment data from July. UBS maintains a base case for a soft landing but notes the outlook is uncertain. Meanwhile, JP Morgan raised its recession odds to 35%, while Goldman Sachs lowered its projection to 20%. The US Department of Labor also revised its jobs data, reducing total employment by 818,000 for the year ending March 2024.

Police dismantled a major illegal e-waste processing operation in Kampung Telok Gong, Port Klang, valued at RM97 mil. The seizure included over 19,000 sacks of recyclable materials and large quantities of metals: 765 tonnes of copper, 16 tonnes of aluminium, 150 tonnes of steel wires, and 600 tonnes of processed and unprocessed items. The syndicate was engaged in illegal e-waste recycling, contributing to environmental hazards and safety concerns. 36 people — five locals and 31 foreign nationals — were detained during the raids. These factories were earning millions of ringgit in profit but were operating illegally without proper registration or licenses.

Just how many companies/businesses are out there in Malaysia? As of July 31, 2024, the Companies Commission of Malaysia (SSM) reported the incorporation of 1.56 mil companies, the registration of 9.32 mil businesses, and 39,783 limited liability partnerships (LLP). SSM has also launched the SSM Search and Safedata-SSM platforms, offering 37 corporate information products such as business profiles, financial histories, and copies of registration certificates for customer access. These platforms aim to provide convenient access to corporate data for businesses and individuals.

3. IN MALAYSIA 🇲🇾

Malaysia is in the fast lane for BRICS membership
PM Anwar Ibrahim said that based on his meeting with Russian President Vladimir Putin at Vladivostok, Russia, he stated that Malaysia is prioritised compared to other countries in terms of our induction into the Global South’s economic bloc. PM Anwar added that it is just a matter of joining BRICS straightaway or becoming a partner country first. PMX also revealed that he is invited to the BRICS Summit in Kaza, Russia from October 22 to 24. At the moment, BRICS members account for a cumulative gross domestic product of USD26.6 tril, representing 26.2% of the world’s GDP, nearly equalling the economic strength of the G7 group.

While it is good to look ahead for our BRICS membership, PM Anwar should be focusing on the ‘low hanging fruits’ first, especially addressing our defence needs. According to Aerospace Technology Systems Corporation Sdn Bhd (ATSC) CEO Lt Col (Rtd) Mohd Fadzar Suhada, the company that maintains the Royal Malaysian Air Force's (RMAF) 18 Sukhoi Su-30MKM Flanker combat aircraft, we only have enough spare parts to ensure that the Flanker can remain airworthy for only three years. The supply chain for the aircraft’s maintenance is still intact, but future sanctions on Russia could cripple the supply chain anytime. Malaysia purchased the Flanker from Russia in 2003 for USD900 mil and was delivered to our airbase in Gong Kedak in 2009. The average lifetime of fighter jets is about 40 years. Relatively, the Sukhois are still young but given the current situation, maintaining the jets is not sustainable. Previously, Malaysia also operated Russian-made Mikoyan MiG-29 aircraft. However, only after 22 years of operation, all airframes have to be retired due to spare parts and engine problems.

Pan Borneo Bonanza
Masking tape manufacturer Centre Global Bhd which diversified into the construction sector in 2019, has bagged an RM616.4 mil contract to upgrade the road from the Lahad Datu Bypass to Kampung Sandau under Work Package 22 of the Pan Borneo Highway Sabah Phase 1B project. This new contract has significantly increased Centre Global’s order by 456.3% to RM751.5 mil. A quick look at its financials here made us wonder if the company has the financial strength to undertake a project of this scale? Hmm, any further questions here?

PBH Asset Management Sdn Bhd on the other hand has been awarded the RM69.25 mil, three-year contract to carry out maintenance work on the Pan Borneo Highway.

Update from the digital sphere

1. According to Maxis, the Malaysian Communications and Multimedia Commission (MCMC) has mandated all Internet service providers to implement public DNS (Domain Name System) redirection for businesses, enterprises, and governments by Sept 30.

   DNS redirection is used to protect your website and users from malicious activity. For example, you can use DNS redirection to block access to phishing sites or malware downloads that use spoofed domain names. You can also use it to redirect users to a more secure version of a website (e.g., from http to https). Thank You Madani.

2. Digital Minister Gobind Singh Deo announced that his ministry will introduce the National AI Office by November. The new entity will be parked under MyDigital Corp and one of its key focuses is to develop an ecosystem aimed at attracting global investment in data centres and related sectors, making Malaysia a leading AI hub in the region. The establishment of an AI-specific entity was recommended by the Khazanah Research Institute (KRI) from the AI Impact and Governance Roundtable held on August 27.

Shorts

1. Madani rebrands PPR to PRR
   Malaysia, a country that never stops rebranding government initiatives every time we change PMs. Now, Putrajaya is rebranding Program Perumahan Rakyat (People's Housing Programme, PPR) to Program Residensi Rakyat (People's Residential Programme, PRR). The ‘upgrading’ of PPR to PRR does not come empty as the government is committed to building 500,000 units of ‘better’ affordable housing with an allocation of close to RM1 bil. The first PRR will be introduced in Larkin, Johor, before being expanded nationwide.

2. MAS aims to fly to Europe by 2025
   The ‘hidup segan, mati tak mahu’ Malaysian Airlines announced that it will resume flights to Europe starting in 2025. Previously, MAS scrapped all flights to Europe except to Kuala London, United Kingdom. Paris, Milan and Madrid are the destinations mooted to be graced by the arrival of the aircraft bearing the ‘wau’ logo soon. The new routes to Europe may be served by MAS’s new Airbus A330-900 aircraft.

3. Petronas reported profit of RM32.4 bil in 1H2024
   Petroliam Nasional Bhd (Petronas) reported a lower net profit of RM32.4 bil for the first half of 2024, down from RM40.2 bil in the same period last year, largely due to deconsolidation of subsidiaries and increased taxes. However, revenue rose to RM171.7 bil, driven by foreign exchange gains. CEO Tengku Muhammad Taufik acknowledged market volatility but deemed the results commendable. He forecast oil prices to stay between USD70 to 80 per barrel in the near term despite geopolitical challenges. View its earnings announcement and report here.

4. Intel puts a pause in the expansion in Penang
   US-based chip manufacturer, Intel Corp, announced that it has partially paused the company’s new chip-packaging and testing project in Penang. The move was initiated due to Intel’s cash flow issues. Apart from the partial pause, about 15% or 2,000 Intel workers working at its Penang plant are expected to be layoff, as part of Intel’s USD10 bil global cost-cutting plan. Intel so far has not yet cancelled its planned USD7 bil new investment in Malaysia that was announced three years ago, but who knows what will happen in the future. What is happening at Intel? Once a Silicon Valley darling, the chip manufacturer lost big on its bet to create a foundry business - manufacturing chips to supply to other companies - in order to compete with its rivals - Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. The bet went so wrong that in 2023, Intel recorded USD7 bil in losses.

5. Khazanah Nasional defends its Fasion Valet investment - read here.

4. AROUND THE WORLD 🌎

“From the river to the sea” does not violate Meta’s policies
Meta’s independent oversight board has ruled that the phrase, often used in solidarity with Palestinians does not in and of itself violate the company’s current policies. The board makes final determination on the platform’s content moderation decisions. The phrase refers to the geographical area between the Jordan River and the Mediterranean Sea, which encompasses Israel, Gaza Strip and the occupied West Bank. The pro-Israel camp claimed that the phrase is a veiled call for violence and have framed it as anti-Semitic and some of the oversight board members felt that after the start of the war, the phrase’s use should be presumed to glorify Hamas and violence. The board came to a decision as the majority found the phrase has multiple meanings and is used by people in various context. 

Amidst the war, here’s a small victory Palestinians can celebrate to - its national football team held South Korea to a well-deserved, surprising 0-0 draw in the opening Group C match in the qualifiers for the 2026 World Cup. 

South Korea to build its own Hollywood
There’s Hollywood, Bollywood and now Kollywood. The South Korean government aims to develop an area spanning 3.3 sq km dedicated to making movies, TV programmes, music and other art by 2035 though the site has yet to be determined. The location will also host full-scale replicas of Joseon dynasty palaces for film shooting and also as a tourist attraction, as it aims to draw 30 mil foreign tourists annually in the next few years. Asia’s fourth largest economy attracted about 10 mil tourists in the first 8 months of the year, which is lower than pre-pandemic levels due to a slowdown in Chinese tourists. 

The government has pledged to establish a KRW100 bil (USD74.9 mil) fund with foreign VCs to invest in South Korean content. Cultural and content exports from South Korea ranging from music to drama to the gaming industry generated about KRW151 tril (USD114 bil) last year for the country. Here’s to another reason for you to visit South Korea again. 

The USD10 mil music streaming AI scam
The US Department of Justice has charged Rob Smith, a musician, for scamming major streaming platforms into paying him millions of dollars in royalties for songs he generated using AI that nobody listened to. Smith, 52, has made more than USD10 mil from his scheme and it was the first prosecution of its kind, according to DOJ’s press release. 

Here’s how he fooled the tech giants including Spotify and Apple Music: Smith uploaded hundreds of thousands of songs, which were collectively streamed billions of times by as many as 10,000 fake profiles that he operated with co-conspirators. To conceal his scheme, he spread his streams across many songs to avoid any unusual spikes in listernership. Smith’s co-conspirator incudes a music promoter and the CEO of an AI music company that provided him with 1k-10k songs a month in exchange for at least 15% of his takings. A distribution company has suspected his scheme and called him out as early as 2018. 

Shorts

1. Samsonite explores dual listing
   Samsonite International SA, the luggage maker (owns Tumi and American Tourister) has selected banks to help arrange its dual listing in the US. The company is currently listed in Hong Kong and is considering the US as its primary listing venue. An earlier proposal to take the company private did not go through as it was priced too high. In H1 2024, Samsonite generated USD1.77 bil in revenue and net income of USD164 mil. Its market cap stands at about USD3.5 bil. The company has been around for 114 years, being founded in 1910 by Jesse Swayder in Denver, Colorado - more on its history here. 

2. Saturn to lose its majestic rings - temporarily
   Come March 2025, a cosmic event will take place where Saturn’s majestic rings will become virtually invisible to earth-based observers. The phenomenon occurs every 29.5 years (the amount of time Saturn takes to orbit the Sun) due to the unique tilt of Saturn’s axis, which will position the rings edge-on to our line of sight. Here’s an image of Saturn - it’s located between Jupiter and Ur anus.

3. Russia’s aquatic 007 suspected of being shot dead
   A beluga whale suspected of being a Russian spy, which was recently found dead off the Norwegian coast is suspected to have been shot with bullet wounds found on its body, animal rights activists claimed. The beluga, nicknamed Hvladimir, shot to fame in 2019 after being spotted in Norwegian waters five years ago. Strapped to the whale was a GoPro that read “Equipment of St Petersburg”, sparking speculation that the curious mammal could be engaged in espionage. The given name Hvladimir is a pun on the Norwegian word for whale, “hval”, and Russian President Vladimir Putin’s first name. The whale is estimated to be 15 years old - not old for a beluga whale, which can live up to 60. Russia has a history of training marine mammals such as dolphins for military purposes.

5. FOR YOUR EYES 📺

1. Where’s Barnes and Noble today?

2. One-legged Paralympic athlete successfully completed a high-jump.

3. Signing out for the weekend with this Nirvana’s Smells Like Teen Spirit cover - guitar + drums + cello + violin + piano - watch here. Have a good weekend ahead!