☕️ "With or without an apology, a crime is a crime" - Anthony Loke on Najib

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

A total of 872,000 or 10.2% of active EPF members have made voluntary contributions amounting to RM9.39 bil (average of RM10.8k) as of August this year. Members can contribute voluntarily to increase their savings, subject to a maximum amount of RM100,000 per year, effective June 1, 2023.

24% of flights in Malaysia have recorded delays, translating to 61,014 delays out of 258,116 flights between Jan and Aug 2024. The majority of the flights (55,024) faced delays of less than 2 hours, whilst 5,990 flights were delayed by more than 2 hours. The delays were due to airline operational factors such as aircraft and crew rotations, as well as extraordinary circumstances and technical issues. In terms of cancellations, nearly 18% of all scheduled flights were cancelled during the same period, amounting to 57,276 cancellations.

Microsoft CEO Satya Nadella earned USD79.1 mil (RM343.01 mil) last year, a rise of 63% year-on-year. A large chunk of it (USD71.2 mil) was made up of stock options. This is despite Nadella requesting a pay cut due to a cybersecurity issue in July 2023 at Microsoft, where hackers gained access to the email accounts of around 25 organisations, including government agencies. Nadella was ‘punished’ — his pay package was reduced by more than half to USD5.2 mil.

3. IN MALAYSIA 🇲🇾

3 reasons why targeted diesel subsidy not implemented in East Malaysia
The annual diesel subsidy allocation for Sabah, Sarawak, and Labuan stands at RM3.6 bil, but ever wonder why the targeted diesel subsidy has not been implemented in the aforementioned three states? Domestic Trade and Cost of Living Minister Armizan Mohd Ali highlighted three specific reasons for this decision during a recent event in Tawau:

• First, profiling difficulties hinder the government’s ability to ensure that subsidies reach those in genuine need-  compared to Diesel users in West Malaysia, there is a clearer target group and established systems like the Subsidised Diesel Control System under the Budi Madani initiative.

• Next, the geographical and logistical challenges in Borneo creates a necessity for diesel vehicles, making it impractical to apply the same subsidy model as in the peninsula where most vehicles run on petrol.

• Third, Armizan pointed out a significant price disparity for goods between the peninsula and Borneo, with recent data showing that 65% to 68% of items were more expensive in Sabah and Sarawak. He further emphasised the government’s commitment to addressing subsidy leakages in these regions.

Business

• More info on Cuckoo Malaysia’s IPO
  Cuckoo International (Mal) Sdn Bhd, the Malaysian arm of South Korea's Cuckoo Holdings Co, has filed for an IPO on Bursa Malaysia and seek to raise as much as RM750 mil, according to sources. The proposed listing will involve an offer for sale of existing shares and a public issue of new shares at a price yet to be determined. This IPO could value the company at roughly RM3 bil and is expected to offer up to a 25.5% stake in the business, which sells and rents various appliances, including water purifiers and air-conditioners. This is a somewhat lofty valuation considering it made a net profit of RM86.87 mil on revenue of RM1 bil last year, giving it a historical price-to-earnings ratio of 34.5x.

• DHL Express launches new RM300 mil KL Gateway facility
  Located at KLIA 1, DHL’s new facility is three times larger, besides featuring the first fully automated sorting system in Southeast Asia. This advanced system also allows the facility to process up to 10,000 shipments per hour compared to 2,400 of the previous premises, significantly improving transit and delivery times compared to previous capacities. The new Gateway facility is expected to become a central hub for DHL’s operations in Malaysia, connecting seamlessly with major global trade flows including the US, China, and Australia. Malaysia's logistics sector is no slouch- we jumped 15 positions to 26th place in the World Bank’s Logistics Performance Index, marking us as one of the top logistics performers in ASEAN.

• BlackBerry regional APAC HQ now in Cyberjaya
  This new office is now fully operational and strategically located to leverage its proximity to the plethora of emerging technology hubs and government infrastructure in Cyberjaya. The new APAC headquarters includes the Cybersecurity Center of Excellence (CCoE), developed in collaboration with MCMC. This world-class training facility aims to upskill Malaysia’s cybersecurity workforce, supporting both national and regional needs. Now may this enhance cyberexperts and reduce data leakages in our country. 

Shorts

1. Free tolls nationwide for Deepavali travels!

   Class 1 private vehicle users in Malaysia will benefit from toll-free travel on highways on October 29 and 30 in celebration of Deepavali, as announced by the Works Ministry. This does not include tolls at Malaysia’s borders like the Sultan Iskandar building toll (North-South Highway) and Tanjung Kupang (Malaysia-Singapore Second Line Expressway). Minister Alexander Nanta Linggi stated that this initiative will cost the government an estimated RM38 mil.

2. “A crime is a crime”, according to Anthony Loke on Najib’s apology

   Speaking at the launching of the new DHL facility, Transport Minister Anthony Loke dismissed former PM Najib Razak's recent apology regarding the 1MDB scandal, stating it is irrelevant given that Najib has been convicted of his crimes. Additionally, when asked about the possibility of supporting house arrest for Najib, Loke clarified that current laws do not allow for such arrangements for serious crimes and that current discussions about house arrest laws are more focused on prison reforms.

4. AROUND THE WORLD 🌎

Are 100,000 Palestinians worth 100 Hamas militants?
The Palestinian Civil Emergency Service reported that its operations came to a halt in northern Gaza due to Israel’s three-week assault into the region, resulting in about 100,000 people being marooned in Jabalia, Beit Lahiya, and Beit Hanoun without medical or food supplies. For its efforts, the Israeli Defence Force reported capturing 100 suspected Hamas militants in a raid in Kamal Adwan Hospital, claiming to have found weapons, terror funds, and intelligence documents, with health officials and Hamas denying any militant presence at the hospital. Amid the fighting, peace talks between Israel and Hamas were restarted, with Egypt putting forward a proposal for a two-day truce for a prisoner exchange, with a goal of talks resuming within ten days of the truce to hammer out a permanent ceasefire.

Meanwhile, the Biden administration has claimed credit for influencing Israel’s reaction to Iran’s missile attack on Oct 1, including convincing Israel not to target Iran’s nuclear sites and energy infrastructure. Officials claimed to have talked Israel down from a larger response that would have taken the region a step closer to all-out war. Israeli PM Netanyahu responded, claiming Israel selected its targets during the strike over the weekend according to national interests, “not according to American dictates”. Iran, in its initial response, downplayed the damage from the strikes but has promised to “use all available tools” to respond, despite President Biden’s call for a halt to escalation.

Over in Lebanon, Israel’s ground campaign has caused vast destruction in over a dozen border towns and settlements, with many of them “reduced to clusters of grey craters”. A spokesperson for the Israeli military said the IDF was attacking towns in southern Lebanon because Hezbollah turned “civilian villages into fortified combat zones” to hide “weapons, explosives, and vehicles”, something Hezbollah and the towns’ residents have denied. This playbook sounds familiar, like something the IDF used recently in a nearby country.

Asian Standoffs

• China bristles at US arms sale to Taiwan

  Beijing has vowed to take “all necessary measures” to assert sovereignty over Taiwan after the US State Department approved a USD2 bil arms sale package for the island nation, a package which included advanced missile systems and radar, and a deal that China has condemned. This plays into one of the pillars of the Biden administration’s foreign policy, which is to counter China’s increasing military and economic assertiveness, with the US shoring up alliances in the region while maintaining trade restrictions on China. Taiwan has already seen a Chinese response, reporting another “combat patrol” by Chinese warplanes and warships near the island following Beijing’s condemnation of the deal. Whether a direct war or proxy war, rest assured the US will always be interested. 

• Japanese political shakeup as ruling party loses majority

  Japan’s Liberal Democratic Party lost a snap election called by new PM Shigeru Ishiba, leaving no party with a clear mandate to lead the country. Parties require a 233-seat majority, but the LDP and its coalition partner, Komeito, only took 215 seats as voters punished the party over a funding scandal and cost of living issues. As for which party will take over the premiership, a vote will be held on Nov 11 to decide. Still, there is the likelihood that PM Ishiba and his party will continue to rule without a majority, as Ishiba has vowed to “enact fundamental reforms regarding the issue of money and politics”, and acknowledged that Japan wants the LDP to “do some reflection”.’

Automaker Headaches

• VW to shut at least three factories in Germany, lay off “tens of thousands”

  The automaker is plotting a deeper-than-expected overhaul, according to Volkswagen’s works council head, following weeks of the automaker negotiating with unions over its plans to revamp its business and cut costs. The automaker will be making concrete proposals shortly, with works council head Daniela Cavallo warning employees that this is not “sabre-rattling”, but is instead “the plan of Germany's largest industrial group to start the sell-off in its home country”. While there have been no specifics mentioned, the automaker will be shutting down at least three factories. According to Volkswagen Brand CEO Thomas Schaefer, the root of the problem is that VW is not productive enough at its German sites, while factory costs are up to 50% higher than planned, meaning individual German plants are twice as expensive as the competition.

• Ford CEO calls China EVs existential threat

  The CEO of Ford, a cornerstone of the US auto industry, revealed that he has been driving a Xiaomi Speed Ultra 7 for the past six months, as part of his habit of driving competitor vehicles to get a feel of the competition. However, the problem is that he is reluctant to give it up, and has advised that China’s auto industry is an “existential threat”, with a Ford board member acknowledging that Chinese-made EVs “are ahead of us”. Let’s compare this to a certain US EV maker, where people paid good money to reserve a car nearly 7 years ago, but have yet to hear anything about a launch date. It’s a beautiful roadster (view here), perhaps worth the wait.

Shorts:

1. ManU sacks ten Hag, brings in van Nistelrooy

   Manager Erik ten Hag was sacked following the team’s Premier League defeat against West Ham United, as the manager only took four wins from 13 games in the new season. Ruud van Nistelrooy, a former striker of the club, has been brought in on an interim basis, as the team looks for a permanent replacement.

2. Boeing looks to fundraising to shore up finances

   The beleaguered planemaker has launched a stock offering to raise a potential USD22 bil to strengthen its finances as well as preserve its credit rating, which has never slipped below investment grade before. Boeing would likely see an increased cost of capital should a downgrade happen, with rating agencies warning, could come to be should the strike be further prolonged.

3. A mother sues AI chatbot firm Character.AI and Google over son’s suicide

   A grieving mother in the US has sued the start-up platform Character.AI (visit site here) and Google for the suicide of her 14-year-old teenage boy last February, where he shot himself “to be with his lover”, a chatbot that he created on the platform. Character.AI is a platform that allows its users to create characters that respond to online chats in a way meant to imitate real people. She said the company programmed its chatbot to “misrepresent itself as a real person, a licensed psychotherapist and an adult lover, ultimately resulting in her son’s desire to no longer live outside” of the world created by the service.

5. FOR YOUR EYES 📺

1. How do digital nomads in Bali make their money?

2. The RM30 mil bungalow in Tropicana Golf Re