Discover more from The Coffee Break
☕️ Malaysia's retirement system ranks 32nd out of 47 systems, graded C
The road to 5-series for the Ringgit, Asia's 2nd-worst currency performer. Third time not the charm - AAX remains PN17.
1. MARKET SUMMARY 📈
The road to 5-series for the ringgit. The Malaysian Ringgit fell to its lowest level since the Asian Financial Crisis that happened more than 20 years ago. The currency dropped as much as 0.5% to 4.7703 per US dollar, the second worst currency performer in Asia, after the Japanese yen. The lowest ever? RM4.88.
2. NUMBERS AT A GLANCE 🔢
Malaysia’s retirement system ranked 32nd with a score of 56 and C grade in the 15th edition of the Mercer CFA Institute Global Pension Index out of 47 retirement systems that were reviewed. Not too bad, right? It’s always relative — our neighbour in the south, Singapore, ranked 7th with a B grade, making it the top in Asia. The Index is made up of three sub-indices, including adequacy, sustainability and integrity, to measure each retirement income system against more than 50 indicators.
You can view the full report and methodology here.
100 tonnes of aid supplies provided by Arab countries and international organisations are left stranded at the city of el-Arish, around 45km west of Gaza. Why are they stuck? Israel, which by mutual agreement must consent to shipments of goods via Egypt, has not agreed to let them in. Meanwhile, Egypt is not permitting Palestinians to exit Gaza in order to avoid the ongoing conflict. We hope the situation gets resolved amicably, but at this rate, it’s tough.
The increase in the service tax rate from 6% to 8% next year is expected to bring an additional RM3 bil in revenue, according to an estimate made by the Ministry of Finance (MoF). The government is expected to collect RM35.8 bil from the sales and service tax, or 1.8% of gross domestic product.
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3. IN MALAYSIA 🇲🇾
Malaysia now has donated RM81 mil to Gaza
After the RM10 mil seed donation announced by Putrajaya during the Budget 2024 speech, collectively, more than 40 Malaysian companies and corporations pooled another RM71 mil into the Humanitarian Trust Fund for the People of Palestine. Unsurprisingly, government-linked companies (GLCs) led by Khazanah Nasional Berhad were the biggest contributors to this new round of donations, raising RM15.5 mil.
On a related matter, PM Anwar Ibrahim reiterated that Malaysia will not send its troops to Gaza, but instead, Putrajaya will focus more on providing humanitarian assistance to the besieged area. PM Anwar stated that the Middle East countries should be the ones playing a role in ensuring stability and peace in the region. The ongoing war between Israel and Hamas has already cost more than 3,000 lives on both sides of the battle, where the alleged Israeli air strike at a hospital in Gaza alone has led to the death of at least 500 people.
On the other hand, Malaysian opposition led by Hamzah Zainuddin has urged the Government to put in a motion during the Asean-Gulf Cooperation Council (GCC) Summit for the Organisation of Islamic Cooperation (OIC) to send in peacekeepers to the Gaza border.
Meanwhile, US President Joe Biden announced USD100 mil in humanitarian aid for Palestinian civilians during his visit to Israel. During his speech, he also warned Israel not to repeat the same mistakes as the US did with 9/11 - getting consumed by rage. US Treasury Secretary Janet Yellen “certainly afford” 2 wars - in Israel and Ukraine as the US economy is “doing extremely well”. The twisted definition of affordability - by having to borrow trillions to help others isn’t considered affordability.
Malaysia will get a special rice quota from India
New Delhi has approved the special delivery of 170,000 metric tonnes of non-Basmati white rice to Malaysia after the successful government-to-government negotiations between the two countries. Earlier this year, India banned the export of non-Basmati white rice and imposed a 20% tax on parboiled rice in order to protect India’s rice supply to their domestic market. Other than Malaysia, only nine other countries received special exemptions to import white rice from India, namely Nepal, the Philippines, Ivory Coast, Cameroon, the Republic of Guinea, Seychelles, Singapore, Mauritius and Bhutan.
A capybara’s jailbreak from Zoo Negara
Straight from the script of Madagascar, a capybara had escaped from its enclosure in Zoo Negara after the zoo had been hit by a brief flash flood due to a heavy downpour. However, the capybara’s attempt to enjoy a free life outside of the confinement of the zoo only lasted temporarily, as the zoo’s staff managed to capture the capybara and return it safely to its enclosure. The good thing about the return of the capybara is the zoo’s Oyen will have its companion and the zoo will not lose its star pair. Watch the flash flood at Zoo Negara here.
Automotive news — Proton to launch new model, MP suggested an agency to cut red tapes to accelerate EV adoption and Tengku Zafrul says AP will remain.
RHB Research predicted that Proton Holdings Bhd will launch its new sedan model, dubbed the SS11, next month, as the national car maker had manufactured 28 units of the SS11 cars in its Tanjung Malim plant back in September. As a reference, the Proton X90 SUV was launched in May, just two months after it was first assembled in March. You can view the leaked photos of the new car here. With one model slated for unveiling, Proton is also bidding farewell to its long-serving MPV model Proton Exora. Proton Exora was the first homegrown MPV that lasted in production for 14 years, with 196,583 units produced.
Moving on, on a macro level, the auto industry is en route to another breaking year, as the year-to-date (YTD) for the total industry volume (TIV) is at circa 735,000 units. With regards to electric vehicle (EV) adoption, EVs only accounted for 1% of total TIV as of September, with BYD controlling 36.9% of the local EV market. And another thing is going up too - our blood pressure with increasing jams.
While talking about the EV industry, one MP voiced a suggestion in Parliament for a single agency under the Prime Minister’s Department to be created in order to cut red tapes in the EV industry. Kepong MP Lim Lip Eng stated that the unnecessary bureaucracy within the industry is hampering the growth of EV adoption in the country. For example, Lim said that to bring EVs into the country, approval from the Investment, Trade and Industry Ministry is needed and another green light from the Transport Ministry is required to make it legally drivable on the road.
In another related auto industry news, Investment & Trade Minister Tengku Zafrul Abdul Aziz told the Parliament that the import license or approved permit (AP) is here to stay for the foreseeable future to ensure
the cronies are ‘kenyang’ that the local automobile manufacturers are prioritised to generate an inclusive growth for the industry.
The third time is not the charm as Bursa rejects AAX’s PN17 upliftment
Tony Fernandes’ AirAsia X Bhd (AAX) is in the limelight as the low-cost carrier’s application for proposed relief and PN17 upliftment was rejected by Bursa Securities. The reason for this rejection was undisclosed, but Bursa has given AAX the fourth extension, this one lasting until 17 January 2024, to submit its regularisation plan to the authorities. The domino effect of AAX’s rejection is that its sister company, Capital A Bhd, is also unable to unload its PN17 designation. Capital A needs AAX to get out of PN17 first, then sell its four short-haul airlines to AAX to get out of its own PN17 status. List of PN17 companies as of 11 October 2023 here — 23 in total.
CelcomDigi not backing down from its 5G charges
CelcomDigi Bhd justified its move to incur additional charges for those who want to enjoy 5G services, all in the name of flexibility. Quoting the company’s CEO Mohamad Idham Nawawi, ‘For a small amount, they can have additional capacity, and then they have access to the 5G network’. Previously, Communications Minister Fahmi Fadzil stated that Putrajaya would talk to the mobile network operators for the latter to waive such additional charges for subscribers to upgrade their services to 5G.
4. AROUND THE WORLD 🌎
Things are looking good for Netflix
Netflix’s latest quarterly performance has put to rest investors’ fear over its decision to crack down on password sharing. Instead of cancellations as feared earlier, the streaming giant saw its subscriber base grow, adding 8.76 mil customers in the third quarter, far exceeding analysts’ expectations. This brings its overall subscriber base to 247.2 mil. Also, this is the biggest jump in subscribers since the second quarter of 2020. Contributing towards this growth is its advertising-supported tier in 12 markets, where 30% of its new customers in those markets opted for this tier.
Inflation is coming to Netflix. Unfortunately, it’s not a documentary on the inflation that is biting the world but an actual increase in its subscription rate. Emboldened by its recent pricing decision, it is increasing prices again (the previous raise was in Jan 2022) in major markets including the US, UK and France. It is only a matter of when, not if, Malaysia will be hit with this hike.
All these combined sent its stock shooting up by 16% yesterday, giving it a market cap of USD177.6 bil. It wasn’t too long ago, back in Apr 2022 that inventors thought all was over for Netflix in this heavily saturated market as it saw its first net subscriber loss in over a decade.
View report: Netflix Q3 2023 Earnings Report.
Things are not looking good for Tesla
Ongoing discounts have taken its toll on Tesla’s bottom line with operating margins shrinking for the third quarter in a row, though the automaker reported growth in its revenue to USD23.4 bil in the third quarter of 2023, up from USD21.4 bil the same period last year. Operating margin was at 17.2% in the same period last year but has declined to 7.6% in the latest reporting quarter.
After years of delay, the long-awaited Cybertruck will be delivered starting Nov 30 with a delivery event at its Texas Gigafactory. For customers, it’s good news. But if you are a Tesla shareholder, not so good news. Elon Musk said Tesla has “dug our own grave with the Cybertruck” as its unique design has made scaling production a challenge and that it would be 18 months before the Cybertruck is cash flow positive. Musk also warned the high interest rate has entirely offset the price discounts.
All in all, Musk’s tone during the earnings briefing was cautious. All these combined sent its stock down nearly 10%, giving Tesla a market cap of USD691.2 bil. Nevertheless, Tesla’s share price is having a good year so far, up over 100%.
View report: Tesla Q3 2023 Update
NYC mayor ‘speaks’ multiple languages to connect with New Yorkers - using AI
New York City mayor Eric Adams has found a creative use of AI - to clone his voice into multiple languages for robocalls. His office used AI voice-cloning software called Voice Lab to clone his voice speaking in Mandarin, Yiddish, Cantonese, Spanish and Haitian Creole and these calls were made to NY residents on community activities.
Adams said this programme allowed him to “speak directly to the diversity of New Yorkers”, as almost 25% are not English proficient. He shared that he was even stopped on the streets and received comments that they didn’t know Adams could speak Mandarin. As interesting as this is, it raises ethical questions about how AI is used in political campaigning.
The next you receive a call from AI (Anwar Ibrahim), don’t be too excited that the PM called you — it’s just AI using AI.
More than 20 companies globally made their public debut on the Nasdaq and NYSE in 2021 with valuations above USD20 bil, including the buzziest names such as Didi, Grab, and Roblox. So how did they perform 2 years on? Down 60% from a cumulative initial valuation of USD717.2 bil to USD284.9 bil. Ouch.
View table: Largest startup IPOs of 2021
Jeffrey Kleintop, the global strategist of financial services giant Charles Schwab has a way to identify recession by referring to cardboard box demand. Things are manufactured and shipped in cardboard boxes and its demand has fallen just like it did in past recessions, pointing towards one in the US. He refers to this as a ‘cardboard box recession’.
Finnish telecom giant Nokia announced it could cut its workforce by as many as 14,000 people after reporting a disappointing third-quarter profit, blaming macroeconomic factors. This would reduce its workforce to as low as 72,000 by 2026, saving up to USD1.14 bil.
Weekend read: Why do sexual assault victims find it hard to go straight to the authorities?
If they do, sexual assault victims are subject to classic victim blaming and shaming. Victims don’t have faith in the criminal justice system to get justice. Instead, they go to the next best alternative — media.
5. FOR YOUR EYES 📺
Someone on Reddit shared his or her monthly earnings in the past three years — SFW! The NSFW content is elsewhere.
If you need to do some thinking over this weekend over a life decision, refer to this. I love it — it asks what would your kindest / bravest / wisest / calmest / truest self do? #weekendreflection