☕️ "Politically Exposed Person" (PEP) - what status is this?

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

16 bil customers — the number of customers serviced last year by the top 4 konbini or convenience stores in Japan. Since emerging in 1969, konbini has become essential to the country’s social infrastructure and a USD77 bil-a-year (RM366.8 bil) industry. The top 4 main chains — 7-Eleven, FamilyMart, Lawson and MiniStop - boast a total of 55,700 branches last year all across the country. Japan’s ageing demographic has changed the composition of konbini workers, with some 80,000 or 9% of the workforce comprising foreigners, and in 7-Eleven, about half are foreigners.

A little-known country in the Caribbean is raking it big from the artificial intelligence craze, but not through tech. The British territory Anguilla (view on map) owns the “.ai” domain and its government collects a fee of between USD140 to thousands of dollars from website names sold at auctions using its .ai domain. In 2023, the nation made about USD32 mil (RM152.45 mil) from those fees, amounting to more than 10% of the nation’s GDP for the territory of almost 16,000 people and 90.6 sq km (about 37% of the size of KL, with an area of 243 sq km). Its premier, Ellie Webster, said the following — “Some people call it windfall. We just call it God smiling down on us”.

Who used to own Alaska? Russia. No, the US did not seize it from Russia. In 1867, Russia offered to sell its North American territory of 1,518,800 sq km, which includes Alaska, for USD7.2 mil (about 2 cents per acre). In today’s value, that’s about USD129 mil. The region was a cost and logistical challenge for Russia to supply and combined with debt accrued from another war (nothing changed for Russia, it seems), it became an economic liability for Russia. Here’s a quick history of what went down in this deal. Here’s Alaska on the map and its proximity to Russia.

3. IN MALAYSIA 🇲🇾

Green stuff - exporting energy abroad and Malaysia’s largest on-site solar system

• Enegem to bolster cross-border green energy sales

  The Ministry of Energy and Water Transformation (Petra) has announced the establishment of the Energy Exchange Malaysia (Enegem) to enable the cross-border sales of green electricity, particularly to neighbouring countries. This initiative aligns with Malaysia's goals for energy transition and supports the ASEAN Power Grid Initiative, aimed at regional power integration. The platform will launch with a pilot auction for a 100-megawatt supply of green electricity from Malaysia to Singapore (our neighbour has expressed an interest in up to 1.2 gigawatts in electricity imports by 2027). Only in May last year Malaysia lifted its ban on renewable energy export.

• Malaysia’s largest on-site solar system at 1 Utama

  A subsidiary of Bursa-listed Solarvest Holdings Bhd has been commissioned to install Malaysia’s largest on-site solar system at the 1 Utama Shopping Centre. The project will cover 273,3000 sq feet (6.28 acres) of the mall’s rooftop and parking lot, generating over 5,700-kilowatt peak (kWp) of renewable energy. The installation will be managed by Solarvest, including overseeing engineering, procurement, construction, and commissioning, based on comprehensive site studies to ensure cost-effectiveness. The value of the project was not disclosed. But let us make some estimation. Based on Progressture Solar, a clean energy provider specialising in industrial decarbonisation, the total cost of solar panel installation would be around RM2.2 mil per 1 mWp (1,000 kWp). Using this as a reference, 1 Utama could have invested around RM12.54 mil in this project. 

Zaid Ibrahim and his PEP status
Former law minister Zaid Ibrahim requested Bank Negara Malaysia (BNM) to remove his name from its list of “politically exposed persons” (PEP). Zaid says he experienced problems when opening accounts or conducting transactions with banks. This post will be less on Zaid’s complaint, more on PEP. 

PEP Crashcourse
So, what is a PEP? In layman’s terms, a PEP is someone who, through their prominent position or influence, is more susceptible to involvement in bribery, money laundering, or corruption. The list could include a range of individuals who hold or have held important public positions (this is the part Zaid isn’t happy regarding his PEP status), as well as their family members and close associates. In practice, when a PEP is involved in a financial transaction, banks and other financial entities are required to undertake additional scrutiny to ensure that the transaction does not involve proceeds from corruption or other illegal activities.

This might involve more detailed background checks, ongoing monitoring of transactions, and obtaining approvals from senior management within the financial institution before proceeding with certain types of transactions. Regardless of whether the person is currently in office or not, the PEP list is designed to be an international standard of risk profiling to identify threats of corruption or money laundering, which is rampant enough in Malaysia as it is.
A short read here from BNM on PEP.

Financial planner financially scammed
A financial planner fell victim to a financing scheme, losing upwards of RM550,000 over two months. The irony here is that he previously cautioned his clients about investment pitfalls. After a few “successful” profit returns of 22% in a short span, the syndicate persuaded him to place more funds. He then lodged a police report after verifying with the Securities Commission that the scheme was illegitimate. Take note; verify with SC first BEFORE putting in money, not after.

If greed hasn’t kicked in, clouding one’s judgement yet, here’s how to assess a ‘legit’ investment opportunity with ‘high, fast abnormal returns’:

• If it’s so good and so ‘legit’, have EPF, Khazanah, KWAP, etc. invested in it? Never mind if it’s high-risk preventing these funds from investing- it’s a matter of portfolio allocation. If so legit, some reputable investment firms would have dipped their toes into it.

• If it’s so good and so ‘legit’. the promoter would not have offered such a wildly profitable opportunity with random strangers and outsiders, especially if the returns are ‘guaranteed’. Why share the pie and dilute one’s own slice? In fact, the next logical step for these promoters is to borrow and max out their balance sheet to invest in this opportunity - assuming it’s truly legit. There’s a reason the most profitable fund in the hedge fund industry, Medallion Fund (run by Renaissance Technology), is only available to invest for their employees. RenTech’s flagship fund generated 62% annualised returns (before fees) and 37% annualised returns (net of fees) over a 33-year period from 1988 to 2021. To put it into perspective, every RM1 invested would have grown to almost RM42,000 (net of fees).

Shorts

1. Acquisition of a major stake in MMC Port to GIP halted

   Global Infrastructure Partners (GIP), a New York-based investment firm, decided not to proceed with the acquisition of up to 49% stake in Malaysia’s largest port operator, MMC Port Holdings, owned by Tan Sri Syed Mokhtar Al-Bukhary. After conducting due diligence, the firm allegedly could not agree on a price with the expected valuation of between RM15 bil (USD3.2 bil) and RM20 bil (USD4.27 bil). The deal could have been the largest in Malaysia’s port sector. Although GIC has paused its plans, there remains a possibility for other players to express their interest in MMC Port, which operates seven ports across Malaysia, including Johor and Penang.

2. Water capacity at Air Itam dam reached critical level stage 3

   The water capacity at Air Itam dam read at 30.8% on Apr 14, reaching stage 3 of the critical level. Penang State Chief Minister Chow Kon Yeow says that the water supply could only last 30 days without rain. The volume of water extracted rose to cater to the high consumption during the festive season. The CM added that the dam only received 22.5 mm of rain so far this month, far short of the expected 300 mm.

3. Xiaomi Malaysia launches a new online store on its official website

   To celebrate the opening of the new webstore, Xiaomi is hosting a flash sale for selected items, with vouchers up to RM190 for new users! Unfortunately, Xiaomi’s recently launched SU7 EV (looks like a Porsche Taycan at a fraction of the price — check it out here) is unavailable for sale. 

4. AROUND THE WORLD 🌎

Getting real on real estate

• Airbnb to help renters earn some extra bucks
  After targeting property owners with its original business model, Airbnb is now setting its eyes on renters. Airbnb is encouraging renters to list their homes on its platform in hopes of earning extra income.  The company plans to work with city and state governments to promote laws allowing tenants to share a home. Airbnb said that more than 40% of US homeowners used the extra money to stay in their homes; of which 10% from it helped avoid eviction or foreclosure. The initiative aims to reduce the impact of rising rental rates, as well as in line with "renter friendly" policies authorised by several city governments

• Seeing $$$ in student accommodation
  Singapore's real estate giant Mapletree Investments has acquired 8,192 student housing beds across 19 cities in the UK and Germany from Cuscaden Peak Investments in a deal worth GBP1 bil (average of GBP122.1k per bed). Assets under the newly acquired portfolio include the UK's key "university cities" such as Bristol and Cambridge, as well as Bremen in Germany. The acquisition brings Mapletree’s overall student housing portfolio to a total of 33,000 beds across 47 cities in the UK, US, Germany and Canada, with total assets amounting to SGD6.2 billion. It also positions the group as “one of the largest owners of student housing in the UK” with more than 17k beds.

Across the causeway

• New Singapore PM this coming May 15
  Deputy Prime Minister and Finance Minister Lawrence Wong, 51, will officially become Singapore’s fourth Prime Minister on May 15, succeeding Lee Hsien Loong. Wong, who is also the Finance Minister, was named 2 years ago as the leader of the People’s Action Party (PAP)’s fourth-generation (4G) team., effectively putting him in line to become the next PM. Lee, the son of the late Lee Kuan Yew, took office in 2004 at the age of 52,

• Singapore car startup seeks value over USD1.5b ahead of IPO
  Carro, Singapore's used car startup, is raising about USD100 mil  (RM477 mil) for its pre-IPO funding round, which could raise its valuation to above USD1.5 bil. CEO Aaron Tan demonstrated a tool dubbed "the Shazam of engines" used by the company, which analyses the health of a second-hand car from the sound of its motor. Carro competes with Malaysia’s first unicorn, Carsome. Carro is present in Malaysia via a USD30 mil investment in myTukar. Carro, which has about 4,500 staff and counts SoftBank and Singapore’s sovereign wealth fund Temasek among its investors, posted its first annual operating profit. Carro’s earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to over USD33 mil for the year ending last month, up from USD3 mil the prior year.

• Apple — IPC reported that Apple’s shipment dropped by 10% in Q1 2024, affected by competition from Android smartphone makers. Samsung claimed the top spot at 20.8% market share, while Apple dropped to second place with 17.3%. Chinese brand Xiaomi placed third with 14.1%. 

• Samsung — Samsung plans to bring selected Galaxy AI features to older flagship phones and tablets next month via the One UI 6.1 update. Samsung 2022 flagship line-ups will receive a trimmed-down version of the Galaxy AI, which excludes the Instant Slow-Mo. The extra feature was introduced with the S24 line and is now available in S23 models.  

Shorts

1. Meta announces anti-nudity tech to fight sextortion
   Meta introduces a range of new safety features to curb “sextortion” and intimate image abuse amongst users, particularly young people. A nudity filter is confirmed to be tested in Direct Messaging (DM) on Instagram. Known as the Nudity Protection, the feature will be on default for those under 18 years old, and will automatically blur images sent to users which are detected as containing nudity.

2. New Russian sanction targets industrial metals
   Prices of industrial metals such as aluminium and nickel have increased on the London Metal Exchange (LME) due to Russian sanctions effective last Saturday. Aluminium rose as much as 9.4% and nickel jumped to 8.8%, with traders anticipating major chain disruption. Russia is an important metals producer, accounting for 6% of global nickel supply, 5% of aluminium and 4% of copper. The new sanctions bar the three metals freshly sourced from Russia on the LME — where global benchmark prices are set — as well as the Chicago Mercantile Exchange.

3. Tesla lays off more than 10% workforce
   Tesla plans to lay off more than 10% of its global electric vehicle (EV) workforce, according to a memo sent to employees by CEO Elon Musk. The world’s most valuable automaker had 140,473 employees globally as of December. Billionaire owner Elon Musk told staff, “there was nothing he hated more, but it must be done”.  Read Elon Musk’s full memo here.

5. FOR YOUR EYES 📺

1. Guide to driving at a roundabout spotted in Kulai, Johor.

2. Designer Soren Iverson creates funny and interesting UI/UX of popular apps. Sharing 2 here today - funny, yet we think are effective ways to boost our daily productivity.

Here’s the second one - an integration of to-do list into Instagram