☕️ MACC Episode Safe House: Another RM321k seized, 2 more safehouses raided

1. MARKET SUMMARY 📈

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2. NUMBERS AT A GLANCE 🔢

Malaysia Property Special

Malaysia’s property transaction values hit RM105 bil with almost 199,000 transactions in the first half of the year, marking the highest transaction values and volume in the last 5 years. Annualising it, it’s on track to hit RM200 bil and 400,000 when the year is out.

The bulk of these transactions continue to come from the residential subsector, contributing 61.3% to volume and 46.8% to values in H1 of 2024. A total of 121,964 resident property transactions worth RM49.43 bil (average transaction value of RM405.3k) were recorded in this period. More than one-fifth of the residential property transactions took place in Selangor.

How have property prices evolved over the years? Let’s take a look at some of these hot places

• Desa Sri Hartamas: Two-storey linked homes launched above RM400k in the 1990s is now going for about RM2 mil - about 5x in appreciation.

• Desa ParkCity: Safa, the first project at this award-winning township, was launched in 2002 starting at RM450k for the two-storey link homes is going or between RM2.2-2.9 mil - about 4.9x in appreciation.

• Lucky Garden, Bangsar: One-storey intermediate terraced houses were sold for RM191k in 1994 and now are on the market for between RM1.26-1.5 mi, translating to 6.6x in appreciation.

• Bukit Beruntung, Rawang: We don’t want to break any hearts of Rawang property investors here. Perhaps, time has changed - read here for a promising outlook in Rawang.

Does 4x, 5x returns sound attractive? If taken into context (i.e. factoring for holding period), it’s decent at best, and on par with inflation, at worst. On a compounded basis, with a 5x appreciation over a 30-year period, the return is just a paltry 5.51% per annum. Conventional wisdom claps for such absolute return but when you break it down, it’s barely anything to celebrate.

Let’s be honest - you don't get rich by being a property investor. Those who made big bucks from properties - they built it and sell to property investors.

3. IN MALAYSIA 🇲🇾

MACC: Episode Safe House continues
The MACC has seized another RM321,000 after raiding two more safehouses of the unnamed politician. Yes, it is the same prominent politician. The MACC chief commissioner, Azam Baki said 4 four people including a director of a company and a former Menteri Besar Selangor Incorporated official were detained. Speaking to reporters in Kota Kinabalu Sabah today, Azam added that the commission also discovered the politician, who is believed to be from the opposition but yet to be confirmed had made investments in Singapore and savings in other banks. More safehouses are in the commission’s sight as well as raids, and arrests will be made to aid the investigations. The MACC is looking to call in the politician after collecting sufficient and solid evidence to assist with the investigations.

GISB: A never-ending tale

• Militant brainwashing: As the investigation into GISB becomes more intense, police are looking into the possibility of the rescued children being indoctrinated with elements of militant jihad. Inspector-General of Police said the children were shown videos related to Abuya by the operators of the charity homes.

• Sexual assault: A warden from a centre linked to the infamous GISB will be facing charges of sexual assault as he is accused of touching a child’s private parts of a 13-year-old 2 years ago at the centre. The lawyer representing the warden has requested a lower bail since the defendant has an unstable income and needs to look after his sick father. Defendants really love using parents as an excuse. Judge Zulhazmi set the defendant’s bail at RM5,000 with one surety and instructed him to report to the nearest police station monthly.

Auditor General’s Report is out - some highlights

1MDB’s black hole: The federal government allocated guarantee commitment grants totalling RM39.74 bil to repay the debts of 1MDB from 2019 to 2023, including principal repayments and other expenses such as bond interest and coupon payments. RM34.59 bil of 1MDB debt was repaid through the government in 2022 and 2023 (RM20.06 bil by 1MDB Assets Recovery Trust Account and RM14.53 bil by the federal government’s development allocation). This will leave a remaining RM9.46 bil of 1MDB debt that the federal government will need to allocate. The report suggests recovering assets related to 1MDB and SRC International Sdn Bhd and using them to cover the remaining debt.

Falling dividends: Dividends received by the federal government from 18 companies and 2 statutory bodies in 2023 were down by almost 18% (RM9.76 bil) year-on-year to RM46.6 bil. The decline has been caused by reduced dividends received from 8 GLCs and 1 statutory body. Some notable mentions:

• Petronas: down 20% (RM10 bil) to RM40 bil - contributing 85.8% of the total dividends

• BNM: down 45% (RM2.25 bil) to RM2.75 bil

• Khazanah: RM1 bil

Hutang negara: The Federal liability position has shown an increase of 81.8% of GDP compared to 78% in 2022 from RM1.4 tril to RM1.492 tril due to an increase in statutory debt. There are actually 2 parts to this trillion figure - debt and financial liability (guarantees). Federal liability now stands at 81.8% of GDP, as compared to 78% in 2022. Debt-wise, it stands at RM1.173 tril (64.3%, up from 60.2% in 2022). Guarantee commitments increased marginally by 1.5% to RM227.404 bil. RM773.75 bil of loans will mature in the coming 10 years.

How will the government pay it off? Slash expenses and increase taxes are 2 big no-nos for politicians. As such, they turn to Mr Inflation. No matter what the government says about fighting inflation, it’s always their best interest to have inflation around, no matter how low - it’s the government’s secret best friend in repaying off its loan, and also an invisible tax most rakyat did not realise they had to bear.
Learn: Why inflation makes it easier for government to pay debt

MRT Corp: The MRT operator’s financial position remained unstable with accumulated losses totalling RM57.624 bil. However, annual loss is on a declining trend, with RM181.5 mil losses incurred in 2023 as compared to RM3.67 bil in 2021 and RM857 mil in 2022. MRT1 and MRT2 operationally have failed to meet daily targets of ridership, targeted of number of trains in operations and peak-hour frequency. The highest ever average daily passenger rate was 37.4%, achieved in 2019.
View chart: MRT1 and MRT2 average daily ridership 2017-2023

For the full report, visit here.

Business

1. Malaysia Airlines Bhd (MAB) under a codeshare partnership with American Airlines will recommence flights to the US by March 22, 2025. AeroRoutes said that MAB will operate the KL-Paris route whereas American Airlines will fly the Paris-US routes. Previously, MAB flew to several destinations in the US but discontinued in 2014 as part of a broader business restructuring plan.

2. Genting Malaysia Bhd’s US subsidiary - Genting Americas Inc., is being sued by its joint venture (JV) partner, RAV Bahamas, for USD600 mil due to alleged fraud. RAV Bahamas has accused Genting Americas of misusing its 78% ownership to shift financial liabilities that occurred in other businesses to the joint venture with RAV Bahamas - the Resorts World Bimini. 20 acres of land were transferred by RAV Bahamas for Resort World Bimini but the fraud by Genting Americas Inc. has devalued the contribution in addition to the financial loss suffered by both RAV Bahamas and Resorts World Bimini. However, Genting Malaysia said the accusation is baseless and is ready to defend against its JV partner.

4. AROUND THE WORLD 🌎

Israel's war crime speedrun continues

Chemical weapons: The nation continues to add to its war crime tally by using chemical weapons in an attack on a UNIFIL observation post, according to a statement released by the peacekeeping force. The post saw a smoke attack that left 15 peacekeepers suffering skin irritation and gastrointestinal reactions, which was preceded by the compound’s main gate being destroyed by IDF tanks, with troops forcing entry. The troops only left after UNIFIL protested through official channels. At this rate, it’s getting hard to tell the difference between Israel and the Nazis.

Burning tents: Meanwhile, a campground housing displaced Palestinians in a hospital complex in Gaza was burned down following an Israeli air attack, leaving at least four dead and at least 70 wounded, with the death toll expected to rise further. The IDF confirmed the attack with a spokesperson claiming that the strike was targeting a “Hamas command and control centre”, though no evidence was provided. Al-Jazeera compiled a photo gallery of the aftermath, which can be viewed here (warning - graphic).

Starvation strategy: Continuing the streak, Netanyahu is also reportedly considering a plan that will see humanitarian aid sealed off from northern Gaza in an attempt to starve out Hamas militants that would also trap hundreds of thousands of Palestinians unwilling or unable to leave their homes after being given a week to leave. The plan would see any Palestinians left in the region after that a combatant, meaning troops would be allowed to kill them. However, Palestinians are also hesitant to leave, as Hamas is also warning them that leaving is too risky, with many also fearful that leaving would mean they would never be able to return.

As an aside, and for a bit of uplifting news, Malaysia’s own ZUS Coffee successfully raised RM143,616 through the innovative donation feature on its app, with the money to be donated to Tabung Gaza.

Leadership lessons

• Trump’s ‘third assassination attempt’ prevented

  Venn Miller, 49, was found to be in illegal possession of a shotgun and a loaded handgun when he was arrested at an intersection near Republican candidate Trump’s rally in Coachella, California. He was then released on bail for USD5,000, after which he told the media he was a Trump supporter and never planned to hurt Trump. However, Riverside County Sheriff Chad Bianco “truly believed” his officers had prevented a third assassination attempt, saying that Miller showed up with “multiple passports with different names, an unregistered vehicle with [a] fake license plate, and loaded firearms”.

• Singaporean opposition leader on trial for lying under oath

  Workers’ Party leader Pritam Singh faces two charges of lying under oath to a parliamentary committee when he was testifying in an investigation into Workers’ Party member Raeesah Khan, who had lied in Parliament about a sexual assault case. Singh pleaded not guilty. Prosecutors plan to ask the court to impose a fine if Singh is convicted. Notably, should the fine reach or exceed SGD10,000 in value, members of Parliament would be disqualified for five years.

The woes of car and plane makers

• Major buyer slams Boeing for 777X delay, leading to scramble amid machinist strike

  The planemaker faces a crunch after Emirates, who initially ordered 150 of Boeing’s 777X more than a decade ago, slammed the firm after its latest announcement of another delivery delay of the planes to 2026, saying the airline has made “significant and highly expensive amendments” to its fleet programmes due to Boeing’s “multiple contractual shortfalls”. This follows Boeing announcing it plans to cut 10% of its global workforce, some 17,000 jobs, even as its machinists, represented by the International Association of Machinists and Aerospace Workers, are on strike for the 5th week.

• Stellantis CEO: EU tariffs on China EVs will only hasten plant closures in Europe

  Automaker Stellantis, the maker of brands such as Ford and Alfa Romeo, warned that the tariffs being placed on Chinese EV makers by the EU will only push Chinese manufacturers to build facilities in Europe, further adding to the overcapacity problems being faced. As it stands, there are already automakers looking to shut down plants in Europe, such as Volkswagen. In the German automaker’s case, four German states are considering working together to help the struggling company’s plants in Germany stay open.

Shorts:

1. Scientists in Brazil discover fossil of new reptile species

   The scientists call the fossil “one of the world’s oldest”, and believe it belongs to a reptile species that dates back 237 million years. The species, named Gondwanax paraisensis, is also believed to help explain the rise of the dinosaurs. The reptile was the size of a small dog, about a metre long. Value wise? Until it hits the auction stand and gets bid by billionaires, only will we know.  

2. Indian workspace provider seeks USD2.5 bil valuation in IPO

   Here’s India’s WeWork for you. Managed workspace provider Table Space is targeting a valuation of at least USD2.5 bil for an IPO planned for next year. The firm was founded in 2017 and leases large office spaces, which it turns into fully-serviced, tech-enabled offices, co-working spaces, and managed meeting rooms. Currently, the firm operates more than 60 centres across six urban Indian cities, primarily serving clients such as Apple, Google, Mastercard, and PayPal and expects revenue to hit USD600 mil by Mar 2027. May their fate be the opposite of WeWork. 

5. FOR YOUR EYES 📺

1. Dinosaur stuff - Cal Orck’o in Bolivia (view map here), a 300-foot wall is home to the world’s largest collection of dinosaur footprints, counting around 5,000 of them from various species. Scientists refer to it as a “dinosaur dance floor” due to the thousands of footprints.

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2. All your burning questions about aeroplanes (e.g. parachute planes, bird danger, can a plane fly with a single engine) answered by a professional