☕️ PMX made many Malaysians' dream come true - additional holiday for the coming Raya, toll-free travel

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

RM7.02 billion — the payout by the takaful industry in 2022, a figure that is 25.9% higher than the year before. The Malaysian Takaful Association (MTA) chairman Elmie Aman Najas said Malaysians’ demand for takaful is growing, with the number of certificates in force increasing to 6.63 million, compared to 6.07 million in 2021.

The Inland Revenue Board of Malaysia (LHDN) has prevented more than 180,216 individuals from travelling abroad for failing to pay their taxes, involving a total of RM7.93 billion. The highest amount owed by an individual in arrears was RM1.884 billion. Last year, 197,190 people were barred from travelling abroad and the total amount of taxes in arrears was RM12.41 billion.

How thirsty can ChatGPT be? Researchers at the University of California, Riverside and the University of Texas, Arlington, said that ChatGPT requires 500 ml of water for every 20 to 50 questions answered, based on Microsoft’s use of 700,000 litres to train ChatGPT-3. AI models like GPT-3 and GPT-4 are hosted in data centres, which are physical warehouses that store large swaths of computational servers.

3. IN MALAYSIA 🇲🇾

PM Anwar Ibrahim is giving the Oprah Winfrey vibes as Raya is approaching this weekend. Below are the key Raya goodies announced by the Prime Minister: 

1. Free holiday — PM Anwar has announced an additional public holiday this weekend. Whether the first of Raya falls on either Friday or Saturday, we will have a long four-day weekend. The moon sighting will be conducted on Thursday to determine when Aidilfitri starts.

2. Free toll — Putrajaya is also rolling out the Free ‘Rahmah’ Toll, where motorists will be enjoying free tolls on all 33 private highways around the country from April 19 (Wednesday) to April 22 (Saturday) as well as April 24 (Monday). Based on our amateur consumer behaviour analysis, the Government is basically incentivising the public to travel back from their kampungs on April 24, so everyone better be packing for a long journey on the highways (pampers for kids and adults may be needed).

3. Discounted summons — Police will be offering one-price for all summonses involved in all traffic offences committed last year and in previous years. Thus, the public needs to pay only RM50 for each summons, but the ‘promotion’ is limited from this Friday until May 21. Once again, we think this is a bad idea — what kind of behaviour are we cultivating? People can keep breaking traffic laws and knowing they can get away with just a slap on the wrist thanks to a PDRM-sponsored ‘mega sale’.

4. More road repair contracts for Bumiputeras — PM Anwar said that Putrajaya will be allocating another RM250 mil worth of road repair contracts exclusively for Bumiputera contractors on top of the RM750 mil already earmarked in the Budget 2023.

5. Special cement price — Special cement prices will be given to developers constructing sub-RM300,000 housing units. The RM120 mil private sector-led initiative will be set to reduce the house price by up to RM5,000 (a saving starting from 1.7% for buyers) and will positively benefit the construction of about 24,000 affordable homes units.

6. More state aid - PM Anwar will be increasing the aid to state governments to RM400 mil via the Pemberian Tahap program. Tahap is an aid programme for states based on the development level of the economy, infrastructure, and well-being.

MACC will not be holding back’Steroid-induced’ Malaysian Anti-Corruption Commission (MACC) is eyeing more big names allegedly involved in corruption cases after bringing in close aides to the Human Resources Minister V. Sivakumar and even the minister himself to assist in MACC’s investigation into an alleged foreign workers’ recruitment scandal. MACC chief Azam Baki stated that he has the full backing of the Prime Minister to pursue any corruption cases involving any individuals, regardless of their political affiliation.

Former BSI Banker: 1MDB transactions fishy in natureIn Najib Razak’s misappropriation of RM2.28bil 1MDB funds trial, a former banker of Singapore-based BSI Bank, Kevin Michael Swampillai, told the court that he had suspected all along that funds transferred from 1MDB subsidiaries to BSI Bank’s accounts, initially intended for investment purposes, were fishy in nature. Unlike conventional investments into fixed deposits or stock markets that could be easily tracked, funds in the BSI Bank accounts were ‘invested’ into companies in the form of loans and in return, the companies issued promissory notes. However, those promissory notes have no economic value and 1MDB could not easily take back the money invested in those companies.

TTDI residents can finally sleep well at nightThe Federal Court has ruled against the reinstatement of a development order on the Taman Rimba Kiara land. Taman Tun Dr Ismail (TTDI) residents are calling Putrajaya to designate the 10.08-hectare park as a city park. The residents are willing to work with PM Anwar Ibrahim, as all federal territories’ matters are under his portfolio. Previously, the land was supposed to be developed with apartments. The project was meant to be developed by Memang Perkasa Sdn Bhd, a subsidiary of Malton Berhad, whose major shareholder is Desmond Lim Siew Choon. Desmond Lim Siew Choon is also the executive chairman of WCT Holdings Bhd and owner of Pavilion.

Business shorts

1. The Health Ministry is rewarding PN17-listed Pharmaniaga Bhd with a long-term 10-year contract to supply medicines and medical supplies for its facilities. How apt — Health Ministry resuscitates and gives life extension to mediocrity and incompetency. Of course, the matter isn’t as simple as finding a replacement - the company is effectively 39% owned by Lembaga Tabung Angkatan Tentera (LTAT).

2. No Rimba, no problem - Desmond Lim has an airport to play with. WCT Holdings Bhd will be working with Malaysia Airports Holdings Bhd (MAHB) to upgrade the Subang Airport for a price tag of RM1.5 bil spread over a three-year period. MAHB will lead the Subang Airport Regeneration Plan, as Transport Minister Anthony Loke announced. Not too bad for Desmond.

3. Malaysia Aviation Group (MAG), the operator of Malaysia Airlines (MAS), recorded a net profit of RM1.15 bil for Q42022. This is the first time MAG has announced a profit since it underwent a complete reset in 2014. In return, the group achieved an operating profit of RM556 mil for FY2022, compared to an operating loss of RM612 mil a year ago. However, MAG is still in the red in terms of its net profit, recorded a net loss of RM344 mil for FY2022. Still too early to cheer for the national fund incinerator. 

4. AROUND THE WORLD 🌎

Bing knocked USD55 bil off Alphabet’s valuationThe New York Times reported that Samsung is considering replacing Google as the default search engine across its lineup of devices in favour of Microsoft’s Bing Search. The move could put USD3 billion in annual revenue at risk for Alphabet. After NYT’s report, Alphabet’s stock slid as much as 4% on Monday, erasing about USD55 billion in market value.

The damage could be much bigger if Apple pulls the same move as Samsung. Alphabet’s contract with Apple is also due for renewal later this year, said to be worth USD20 bil. The New York Times reported that Apple received an estimated USD8-12 bil in 2020 to make Google search the default search on Apple devices, and it may have gone up as high as USD15 bil in 2021.

Ernst & Young cuts 3,000 jobs in the USAfter the firm called off plans to break up its auditing and consulting divisions, it announced that it will cut off 5% of its US workforce, citing overcapacity. The move comes as corporate America is bracing for an economic downturn. EY is not the only one — KPMG has also reportedly announced job cuts in the US, while Accenture and McKinsey are among the big names to have announced redundancies in recent months.

The most valuable company, Apple Inc., goes deeper into bankingAfter launching Apple Card with Goldman Sachs in 2019, Apple now offers a savings account administered through its Wallet app in partnership with Goldman Sachs. The savings account provides an interest of 4.15% p.a., compounding daily and with an account limit of USD250,000, which is insured by the FDIC (the US version of PIDM). According to the US government data, the average US bank account savings rate is just 0.37%. Apple’s proposition looks attractive to the USD60 bil in combined bank deposit outflows from Charles Schwab, State Street and M&T in the first quarter.For new subscribers that joined The Coffee Break family, read our thread on how PIDM works in the event your Malaysian bank gulung tikar. 

Apple has also opened its first Apple Store in India in a bid to deepen its retail push in the world’s second-largest smartphone market. 95% of smartphones in India currently run on Android. Can Apple take a bite of Google’s market share? Apple will be launching its first retail store in Malaysia soon too.

On the other hand, Goldman Sachs Group reported lower profits for Q12023 because of a slowdown in deal-making and a loss on the sale of part of its Marcus personal loan portfolio. The quarterly profit was USD3.23 billion, down 18% from a year ago. Goldman took a USD470 mil loss on the part of the Marcus loan portfolio. Investment bankers were hoping for a bustling quarter, but it never came, as the latest banking crisis and continued rising interest rates have seemed to prolong the slowdown.

China rebounds from Covid-19China’s gross domestic product (GDP) increased by 4.5% compared to a year ago as the country emerged from its harsh Covid restrictions. A boost in household spending and rising factory activity drove the GDP higher than last year. Keep in mind there is also the low base effect. People in China are also revenge travelling as more than 45 million passenger trips were taken last month.

Shorts

1. Tech billionaire Elon Musk wants to develop a new AI called TruthGPT, which he claims would be a maximum truth-seeking machine. The aim is to create more good than harm — what’s good? However, he may not be allowed to use the word GPT in the name anymore as OpenAI had, in December 2022, applied for a trademark for the term ‘GPT’.

2. Two families are giving Amazon.com Inc a headache over the latter’s Kindle App. Reuters reported that explicit materials have been made available on Amazon’s Kindle Unlimited e-book subscription. Titles such as “75 hot fully nude photos of a young blonde” and “Real Erotica: Amateur Naked Girls – Vol. 4” were made available in the app. Apple and Alphabet have both rung the alarm and called on Amazon to strengthen its content moderation.

5. FOR YOUR EYES 📺

1. How to be happy? Find the optimum time to spend on social media. The chart below (albeit a little dated) plots the average amount of time people spend on social media each day among people who are and aren’t happy with the amount of time spent on these platforms. Note the missing platform.

2. Alphabet CEO Sundar Pichai: AI more profound than fire, electricity. 60 Minutes took a tour inside Alphabet’s AI laboratory.