☕️ RM1.6 bil of 1MDB funds used for luxury goods

1. MARKET SUMMARY 📈

Some Bursa updates:

• FBM KLCI is having a good year, up 11.2% year-to-date. Having a better year is the FBM Small Cap Index, up 18.1% YTD. The index, which tracks 98% of Bursa-listed companies (excluding the top 100), has seen small-cap counters gaining nearly RM40 bil in market value since the start of the year.

• 820 companies or 81.3% of the total 1,009 Bursa-listed companies, are Shariah-compliant as of 27 May 2024.

2. NUMBERS AT A GLANCE 🔢

According to the National Health and Morbidity Survey (NHMS) 2023, 12.9% of Malaysians have delayed seeking medical treatment due to financial constraints over the past year. The survey, which polled 9,177 individuals between July 21 and October 13 with a response rate of 26.5%, also highlighted public complaints about congestion and long waiting times at public hospitals. Additionally, the utilisation of government facilities dropped from 64.2% in 2019 to 48.9% last year.

Despite the rise of streaming platforms, Malaysians still listen to the radio, with the media having 20.2 mil listeners every week, according to the latest Radio Audience Measurement (RAM) report. The survey, conducted by the market research institute GfK in collaboration with Commercial Radio Malaysia (CRM), highlights the enduring appeal of radio, with listeners spending an average of 12 hours tuning in each week. Afternoon segments (Monday to Friday, 4pm to 8pm) attracted the highest number of listeners, with a weekly audience of 13.7 mil, while morning segments (Monday to Friday, 6am to 10am) achieved 13.2 mil listeners.

In response to a series of incidents where a small group of orcas around the Iberian Peninsula rammed into and sometimes sank at least 673 boats since 2020, the Portuguese and Spanish governments commissioned a report to look into this peculiar behaviour. The report suggests that these orcas, particularly young juveniles who are curious and exploratory, are not being aggressive but are engaging in playful behaviour. Scientists liken this to bored teenagers looking for fun, noting that orcas, much like humans, enjoy following trends.

3. IN MALAYSIA 🇲🇾

Rosmah amassed luxuries worth RM1.6 bil with 1MDB funds
Rosmah Mansor allegedly amassed jewellery, handbags, and other luxury items worth almost RM1.6 bil from 48 different vendors in at least 14 countries, all purchased with funds misappropriated from 1MDB and SRC International Sdn Bhd. The 515-paged statement of claim (SOC) by 1MDB alleged that 320 transactions led to purchases with funds taken between 2010 and 2014. The payments are traceable to and/or represent funds misappropriated from 1MDB, its four subsidiaries, and SRC International in the four years. The four 1MDB subsidiaries; 1MDB Energy Holdings Ltd, 1MDB Energy Ltd, 1MDB Energy (Langat) Ltd and Global Diversified Investment Company Ltd, are named as joint plaintiffs, along with SRC International.

The purchases involved 48 vendors across 14 countries, facilitated by eight offshore entities acting as intermediaries. These entities funnelled the misappropriated funds to various vendors for Rosmah’s benefit. The plaintiffs are seeking the recovery of these luxury goods or their equivalent value, alleging breach of fiduciary duties and trust. This legal action follows a failed forfeiture attempt after a raid on Pavilion condos. Rosmah has until July 4 to file her defence.

Firms raising prices post-diesel subsidy rationalisation
A number of businesses have raised prices for their goods and services following the government’s end of the blanket diesel subsidy. Hardware store operator Chuan Soon Heng Sdn Bhd cited a sharp increase in transportation costs – raising product and transport prices immediately. Concrete sellers DPG Readymix Sdn Bhd and LCS Marketing Sdn Bhd also increased prices due to higher diesel costs. DPG Readymix, based in Kelantan, explained that the price change was made after they were informed that the company is not eligible for the diesel subsidy fleet card. Hong Guan Towing Service also raised their service charges due to increased operating costs, as no subsidy is allocated to tow trucks. This could signal a trend that will impact consumers in the long run, as those who cannot benefit from the subsidy will justify inflated prices. Did the Madani government overlook some of these calculations when they implemented the targeted subsidy?

All about lands – buying & selling

1. S P Setia Bhd announced the sale of its 959.72-acre Tebrau land to Senibong Island Sdn Bhd, linked to tycoon Tan Sri Syed Mokhtar Al-Bukhary, for RM564 mil in cash. This follows two failed attempts to sell the land to Scientex Bhd due to Bumiputera equity conditions imposed by the Economic Planning Unit (EPU). The sale, conducted through its subsidiary Pelangi Sdn Bhd, is expected to yield a profit after tax of RM332 mil, enhancing the company’s financial standing.

2. UEM Sunrise Bhd announced the sale of 11.7 hectares (28.9 acres) of land in Iskandar Puteri, Johor, for RM144.9 mil cash, intended for the development of a data centre featuring cutting-edge technologies. The buyer is identified as a leading global data centre industry player. This follows UEM Sunrise's recent MOU with LOGOS Infrastructure Holdco Pte Ltd to develop a data centre campus in Gerbang Nusajaya. The proximity to Singapore is expected to benefit from growing investments in Iskandar Puteri.

3. Other property developers in Johor have also sold land for data centre developments. Eco World Development Group Bhd sold 123.14 acres to Microsoft Payments (Malaysia) for RM402.3 mil. Microsoft Payment (Malaysia), a wholly owned subsidiary of Microsoft Ireland Operations Ltd, previously purchased four parcels of land totalling 85.37 acres in Johor from Crescendo Corp Bhd for RM447.64 mil in cash since Nov last year.

Qdenga: Malaysia’s first dengue vaccine
Takeda Malaysia launched its dengue tetravalent vaccine, Qdenga, on June 11. The vaccine, requiring two doses three months apart for those aged four and above, will initially be available at GP clinics and private hospitals, with efforts to introduce it to the public healthcare sector. Clinical trials show 80.2% efficacy against symptomatic dengue 12 months post-vaccination, and after four and a half years, 84.1% efficacy against hospitalisation and 61.2% against symptomatic cases. In Q1 2024, Malaysia reported 41,565 dengue cases and 28 fatalities.

4. AROUND THE WORLD 🌎

Apple Intelligence, Musk Unamused
The tech giant unveiled a slew of new AI-powered features for its upcoming iOS 18, iPadOS 18, and macOS Sequoia operating systems, backed by a partnership with OpenAI. This marks the latest move by Apple to fight off the perception that it is falling behind in the race to capitalise on AI, with Apple CEO Tim Cook promising that the new features “go beyond artificial intelligence – it’s personal intelligence”.

The upgrades include an overhaul of their proprietary virtual assistant Siri, which will be capable of more tasks with the help of ChatGPT. Apple also put its own spin on things by putting privacy at the core of AI, a step away from competitors Microsoft and Google.

However, Tesla CEO Elon Musk criticised the partnership, going so far as to mock Apple Intelligence. He also stated that should Apple move ahead with the ChatGPT integration, he will proceed to ban Apple devices from his companies, calling them an “unacceptable security violation” and the AI integration “creepy spyware”, adding that visitors would have to store their Apple devices in a Faraday cage. Honestly, Musk should be more concerned about his USD56 bil Tesla pay package, which shareholders will be voting on soon.

Still, analysts believe the partnership and AI integration may “encourage a cascade of new purchases” due to the integration not being backwards-compatible with all of Apple’s devices, requiring at least an iPhone 15, though it will include a long-awaited calculator app for its iPadOS 18. A slew of improved sales would be a shot in the arm for the company’s sales decline for its biggest-selling product, though there remain sceptics as to whether or not AI will be enough to help Apple. The firm reported a revenue of USD200.6 bil for its latest financial year, down from USD205.5 bil the previous year.

Gaza - A Tentative Peace?
In what the US is calling a “hopeful sign”, Hamas has accepted a UN resolution backing a plan to end the war with Israel in Gaza and is ready to negotiate details. This comes after US Secretary of State Antony Blinken’s latest visit to the region, with conversations on plans for Gaza after the war to continue over the next few days. Blinken pushed Israeli officials to end the war at a meeting a day after US President Joe Biden saw his truce proposal approved by the UN Security Council.

Still, Blinken also noted that, while Israeli Prime Minister Benjamin Netanyahu “reaffirmed his commitment” – unofficially – to the proposal, the response from Hamas was “not conclusive” and that what counts is word from Hamas’ leadership, rather than from the group as a whole.

Meanwhile, both sides are racking up war crime counts, as the UN human rights office said that the Palestinian armed groups’ holding of captives in densely populated areas could amount to a war crime. Israel’s “rescue operation” to recover four hostages that killed more than 270 Palestinians could count as well, with the UN office stating the manner of the raid “seriously calls into question” whether the Israeli forces respected the principles of distinction, proportionality, and precaution – the laws of war.

Russia’s De-dollarisation Plan
Russia is leading the push for the BRICS coalition – which consists of Brazil, Russia, India, China, and South Africa – to develop a payment platform that will allow them to bypass the US dollar. The system will allow for more trade and lending in the national currencies of the coalition and will improve the international monetary system, according to Russian Foreign Minister Sergey Lavrov. Russia is keen to move its trading partners away from the dollar, considering the sanctions it faces from the US and its allies. This comes as other countries are also trying to diversify their assets and diminish the dominance of the US dollar, in fears that sanctions could shut them out from the world’s dollar-based financial system.

Still, the G7 will be expected to issue statements to smaller Chinese banks at next week’s summit warning them away from helping Russia dodge Western sanctions. The G7 is not expected to take any immediate punitive action against them, such as cutting off their access to the dollar, though the coalition is concerned that China is becoming the factory backing Russia’s military ambitions. The summit will also discuss how profits gained from Russian assets frozen in the West could be leveraged for Ukraine’s benefit.

Multiple animal casualties from heatwave & accidents

1. Malaysia — Five animals at Razia Rimba Zoo in Kuala Berang died due to the extremely hot weather, with temperatures reaching up to 40°C. Over 100 animals of various species face the risk of heat stroke, but multiple measures were taken to reduce the risk– installing a sprinkler system, enlarging the pool, and adding ice to lower the temperature. Despite the effort, a capybara, alpaca, kangaroo, spotted deer, and matamata (a Brazilian freshwater turtle) still succumbed to the heat and died. Rangers are increasing monitoring to ensure sufficient water supply, and plans to increase the zoo’s animal population have been postponed. As it should. Fix your infrastructure first.

2. Mexico — Amid Mexico's heatwave and drought, nongovernmental groups are rescuing suffering wildlife by air-conditioning birds and saving monkeys with heatstroke. The government is cooling animals in state-run zoos by giving lions ice cream (i.e. frozen meat lollies) and feeding owls frozen rat carcasses. A heat dome over the southern Gulf of Mexico and northern Central America has caused high temperatures, severely affecting central and southern Mexico. On the Gulf Coast, an animal park has air-conditioned rooms for birds of prey. In Tabasco, over 250 howler monkeys have died from heatstroke, with NGOs stepping in as primary rescuers due to government budget cuts.
   Watch: What is a heat dome?

3. Thailand — A fire at Bangkok's famous Chatuchak Market killed around 1,000 animals, including birds, dogs, cats, snakes, rats, pythons, and geckos, as it destroyed nearly 100 shops. The blaze, caused by an electrical short circuit, resulted in no human casualties or injuries but prompted renewed calls to shut down the controversial pet zone, known for its poor animal living conditions and high disease rates. The fire damaged most of the 118 shops in the pet zone, covering 1,400 sq metres. Shop owners, devastated by the loss, are seeking compensation. Animal rights groups, including PETA and the Wildlife Friends Foundation, urged the Thai government to prevent the pet zone from reopening, citing cruelty and safety hazards.

Airline Mishaps

1. Austrian plane’s windscreen shatters after flying through storm

   The Austrian Airlines Airbus A320 saw its windscreen shattered and its nose ripped off after encountering a thunderstorm during its approach to Vienna, Austria. The damage came from the plane being pelted by hail in the thunderstorm, which pilots noted was not visible on the weather radar. The 173 passengers and six crew were unharmed, with the plane making a safe landing in Vienna. View the state of the plane here.

2. Singapore Airlines offers compensation for turbulent flight

   The offers started at SGD10,000 (USD7,386) for minor injuries, with the airline inviting those with serious injuries to discuss offers to meet specific needs. The airline stated that passengers medically assessed as having sustained serious injuries requiring long-term medical care and requesting financial assistance will be offered an advance payment of SGD 25,000 (USD 18,466) as part of the compensation. 11 passengers are still receiving medical care in hospitals in Bangkok, three weeks after the incident that claimed the life of a 73-year-old aboard the flight.

5. FOR YOUR EYES 📺

1. Old but gold. If makan rasuah, batal puasa?

2. Most wait for the best time to go into the stock market, but the chart below simply shows that waiting (or rather timing) for the best opportunities has a huge cost.