☕️ X (fka Twitter) finally living up to its name, by allowing xxx content

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

Housing and Local Government Minister Nga Kor Ming highlighted a significant improvement of over 40% in the reduction of overhang residential units since the Madani government took office. Speaking at the launch of the Real Estate and Housing Developers’ Association (Rehda) Institute’s affordable housing report, Nga revealed that the number of unsold properties decreased from 37,066 to under 24,000 units. Approximately 13,066 overhang residential units have been sold since the coalition government took office. Property overhang refers to properties that remain unsold nine months after their launch.

The International Atomic Energy Agency (IAEA) reported that over the past 30 years, more than 4,200 incidents (an average of 140 incidents per year) involving lost, stolen, or mishandled nuclear or radioactive material have been recorded. Last year alone, 31 countries reported 168 such incidents, consistent with historical averages. The United Nations’ nuclear watchdog has called for vigilance over these incidents as nuclear materials, such as uranium and plutonium, can be used in atom bombs. No wonder, the inspiration for so many action movies.

App stores are highly lucrative for tech giants Apple and Alphabet, which dominate the mobile operating system market. While both companies are secretive about their app store financials, they earn significantly from commissions: a 30% fee on digital goods sales and a 15% cut from app subscriptions. Last year, Apple and Alphabet reportedly earned USD27 bil and USD13 bil, respectively, from these commissions, according to Sensor Tower. However, the duopoly is under attack from governments around the world — EU’s Digital Markets Act, Japan is trying to pass a similar bill, the UK is probing the app-store business and India wants to launch its own app store.

3. IN MALAYSIA 🇲🇾

BDS strikes back at Zafrul’s “Why Blackrock, but not Apple?”
Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz defended the government’s decision to allow US-based Blackrock to own shares in Malaysia Airports Holdings Bhd (MAHB) last Sunday, saying that Blackrock is not Israeli-owned and noted shareholders like sovereign wealth funds from Abu Dhabi, Kuwait, Saudi Arabia, and Qatar. To which Pro-Palestine movement BDS Malaysia responded by citing Blackrock’s significant investments in companies supplying weapons and arms to Israel (such as Lockheed Martin, Boeing, etc.) – labelling these firms as “genocide enablers”. Blackrock also invests in Israeli high-tech startups and its CEO Larry Fink’s vocal support for Israel proves points of contention.

BDS further clarified that the movement employs a "targeted boycott" strategy, focusing on a specific number of companies for their boycott efforts. This selection is based on criteria such as the company's level of complicity, the availability of consumer alternatives, and the likelihood of achieving success, thus why Apple is not a boycott target. BDS urged Zafrul to reconsider Blackrock's involvement in a consortium bid to privatise MAHB, which manages 39 airports in Malaysia. The consortium includes subsidiaries of Khazanah Nasional, EPF, Abu Dhabi Investment Authority, and Global Infrastructure Partners (GIP).

Pension funds & Retirement:

1. KWAP: Retirement age should rise in tangent with life expectancy

   Retirement Fund (Inc) (KWAP) CEO Nik Amlizan Mohamed said that we should consider raising the retirement age due to increasing life expectancy. Currently set at 60, the retirement age should be re-evaluated as life expectancy has risen from 57 years in 1960 to 75 years today. Nik Amlizan emphasised the need to revisit pension plans and social security systems to ensure retirees can sustain themselves during longer retirements, potentially living up to 100 years. She highlighted the importance of adjusting policies to accommodate a potential increase in retirement age and ensuring the entire ecosystem is redesigned accordingly. Employees Provident Fund (EPF) chairman Ahmad Badri also noted that the rising life expectancy poses significant challenges. Despite the increase in average life expectancy to 75 years, healthy life expectancy remains at 65.7 years, underscoring the need for comprehensive care and resources for the ageing population and promoting healthy ageing.

2. PM Anwar Ibrahim noted that 1 in 4 EPF members deplete their savings within 5 years of withdrawal. The lump-sum nature of EPF benefits leaves many Malaysians unable to maintain a sustainable standard of living in retirement or manage longevity risks. Only 29% of Malaysians have a pension or similar income during retirement, exposing the elderly vulnerable to poverty – driving them to continue working until their health fails. Anwar emphasised the need for comprehensive pension reform, suggesting the expansion of EPF coverage in phases to include more of the working-age population to ensure adequate retirement savings.

   Read: Why public pension reform matters and needs to happen

Business

1. Maybank says solar will be 54 times more profitable than palm oil

   According to Maybank Investment Bank, large-scale solar ventures (LSS) present a lucrative opportunity for palm oil producers, potentially generating up to 54 times more operating profits per hectare than oil palm. Key beneficiaries include Sime Darby Plantation Bhd, Kuala Lumpur Kepong Bhd, and IOI Corp Bhd due to their estate locations. Sime Darby Plantation is currently the only company publicly committed to renewable energy, aiming for 1GW capacity. Since 2018, Sime Darby Plantation has leased significant land for solar farms under LSS schemes.

   However, not all agricultural land is suitable for LSS; it requires flat-to-gently undulating land near the national grid. Maybank estimates that 1GW capacity could generate RM134 mil to RM266 mil in annual income using 1.5-1.7k hectares (starting from RM89.3k per ha), compared to the sector's average oil palm operating profit of RM4,444 per hectare over the past decade. Some planters have leased land for LSS farms at returns double to triple that of oil palm, providing immediate rental income versus the seven-year wait for oil palm profits. Maybank suggests it’s financially sensible for planters to produce solar energy themselves, maximising land value and potential appreciation after the 20-year concession ends. Sambil menyelam minum air.

2. Petronas 1Q profits down 11%

   Petronas reported a 10.5% decline in 1Q net profit to RM21.3 bil, compared to RM23.8 bil last year, despite a slight 0.4% revenue increase to RM89.7 bil. For context, Maybank — the biggest company by market capitalisation on Bursa, posted revenue of RM64.5 bil in 2023. Petronas’s President and CEO, Tengku Muhammad Taufik, indicated the company anticipates continued volatility in pricing and challenging conditions for the rest of the financial year. The firm is focusing on its energy transition strategy, aiming to develop hydrocarbons with effective decarbonisation initiatives and pursue cleaner energy solutions.
   View: Financial Report Q1 FY2024

   

   Source: Petronas Q1 FY2024

Shorts

1. Hydroshoppe Director’s KL Tower bribery case trial to begin Sept 10

   The KL Sessions Court has scheduled a 15-day trial starting Sept 10 for Abdul Hamid Shaikh, a director of Hydroshoppe Sdn Bhd. He is accused of offering an annual bribe of RM500,000 over 15 years to benefit former communications and multimedia minister Annuar Musa, linked to the KL Tower concession acquisition. Hamid allegedly offered the bribe in 2022 through Tan Ser Lay to expedite the KL Tower takeover. Hydroshoppe also faces charges under the MACC Act for jointly offering the bribe. Curious, if the giver got investigated and action taken against, what about the recipient?

2. EV road tax fees up to 85% less in 2026

   Transport Minister Anthony Loke announced that EV owners will see a reduction of about 85% in road tax fees starting Jan 1, 2026. The new road tax structure will be based on the power output of the electric motor with a progressive increase in fees. The new structure is ensured to be significantly lower than the current rates, encouraging more vehicle owners to switch to EVs. 

4. AROUND THE WORLD 🌎

What’s up with the Japanese carmakers?
The Japanese government has recently ordered a re-examination of almost 90 manufacturers for their testing procedures, after decades of fraud were uncovered at a pair of Toyota affiliates (e.g. Daihatsu) last year. There are some scathing revelations. Here are the latest findings:

1. Toyota shares dipped 1.1% in morning trading in Tokyo on Tuesday after disclosing that they falsified safety certification tests. Toyota submitted faulty data during pedestrian safety tests for three current models: Corolla Fielder, Corolla Axio and Yaris Cross. Toyota has currently halted shipments of a handful of models. These 3 models account for less than 2% of the 11 mil vehicles Toyota produced last year.

2. Mazda has fabricated test results and tampered with the units used for collision testing in five models, including the Mazda2 and Roadster RF. Irregularities were identified in over 150,000 units the automaker has produced since 2014 for the Japanese market. The company has halted 3,500 orders but is not considering recalls at this point.

3. Honda Motor Co shares fell 2.4% as the company was found to have fabricated data related to noise and gasoline engine output, affecting more than 3 mil units (including Accord and Odyssey). Customers can continue to use their vehicles since they meet legal standards. The automaker didn’t find any falsification for cars currently being sold or for upcoming models.

Indonesia’s emerging startup Evermos, the next unicorn?
Evermos, a social commerce startup based in Bandung, Indonesia, has big plans, including an IPO in two years. The five-year-old company is aiming to serve over 80% of Indonesians who own a smartphone but do not use e-commerce in the country, perhaps due to various reasons such as lack of access to credit cards or bank accounts and mistrust of online shopping.

Unlike conventional e-commerce operators, Evermos itself does not sell products on its platform. Instead, it connects local suppliers to small, often one-person distributors through its platform. Known as resellers, these people help suppliers reach a bigger market while getting a chance to earn money by serving as “sales agents.” These resellers market the products on social media such as WhatsApp and Tiktok, an effective avenue to sell as Indonesians prefer to buy from people they know and trust. Resellers share their margin with Evermos. In return, Evermos provides resellers with training on how to use social media to market products.

Evermos forecasts to double its gross margin value to USD800 mil this year and aims to be EBITDA-positive in Q4 2024. It has already raised a total of USD78.25 mil in capital, according to DealStreetAsia. Its investors include the International Finance Corp., part of the World Bank Group, plus venture capital firms like Shunwei Capital, UOB Venture Management and Jungle Ventures.

Unions in Nigeria declared an indefinite strike, causing power grid shutdown and airline disruption
Never downplay the power of the collective voice, as shown by Nigerian unions, which began an indefinite strike over the government’s failure to agree to a new minimum wage. The strike is the fourth undertaken by the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), two of the country’s biggest union federations, since President Bola Tinubu took office last year. Nigeria has the largest population in Africa, with over 223.8 mil people.

Just how far would they go with their protest? In this case, shutting down critical infrastructure of the nation. Union members drove operators away at power control rooms and shut down at least six substations, eventually shutting down the national grid. Nigerian airline Ibom Air has suspended flights until further notice while United Nigeria said that airports across the country had been shut down and striking workers had permitted none of its flights to operate. The union has also directed members to withdraw their services in compliance with the indefinite strike.

The unions want the current minimum monthly wage of 30,000 naira (USD20) to be increased to nearly 500,000 naira (USD336). The government has only offered 60,000 naira (USD40). The demand would increase the government wage bill by 9.5 tril naira (USD6.3 bil), which is capable of “destabilising the economy”, according to Information Minister Mohammed Idris.

Shorts:

1. Kanlaon volcano eruption

   The Kanlaon volcano, located in the Negros Islands in the Philippines, erupted last Monday, sending a 5km plume of ash into the sky and a strong earthquake with its eruption. Work and school in nearby Canlaon City has been suspended, while three airlines cancelled 32 flights on Tuesday. Philippines authorities have issued an evacuation order to locals, with warnings of possible further eruptions including hazardous ash fall and sulphuric odour. There are no reports of fatalities, loss or injury so far. Kanlaon is one of Phillipines two dozen active volcanoes and last erupted in December 2017.

2. X now officially allows adult content
   NSFW content on X has long existed. Now, X is officially allowing users to post porn and adult content on its platform now, but with a few caveats. Users can only post consensually NSFW content as long as it is labelled and not displayed on prominent places like profile photos or banners. Users must mark their posts as containing sensitive media and the platform will not allow users under 18 or those who haven’t entered their birth dates to see such posts. The new rules also cover AI-generated videos and images. The adult content policy reads that it acknowledges consensual adult content as a “legitimate form of artistic expression”. Be careful what you browse on X moving forward, as the algo will learn of your “curiosity or habit” and may populate your feed accordingly.

5. FOR YOUR EYES 📺

1. The top 10 countries that owe the most money to the International Monetary Fund. It would be a miracle for any of these countries to claw their way back out from such indebtedness. An eye-opening read here on how the IMF and World Bank serve the interest of the West and further repress poor economies.

2. Been thinking about the newly launched Sonos Ace headphones? They retail at RM2,299. MKBHD shares his thoughts on these cans.