Malaysia

Swiss 1MDB probe holds fat tail risks for Malaysia

1 Feb 2016

Switzerland’s attorney general has indicated $4 bln was misappropriated from state firms, undermining Prime Minister Najib Razak’s efforts to shrug off the mess involving the sovereign fund. Though he can manage the fallout at home, foreign investigations are a lingering threat.

Goldman shuffles further from eye of 1MDB storm

28 Jan 2016

The Wall Street firm made outsized fees raising money for the fund at the centre of a scandal that nearly toppled Malaysia’s prime minister. Now a top banker involved in the deals has gone on leave. Though it distances Goldman from the controversy, reputations are harder to mend.

"Royal gift" is odd exoneration for Malaysian PM

26 Jan 2016

The country’s attorney general says Najib Razak received a $681 mln donation from the Saudi royal family - and then returned most of it. The explanation clears the prime minister of wrongdoing, shoring up his position. But it won’t exactly draw a line under the controversy.

Malaysia’s strongman faces a challenge to impress

21 Jan 2016

Prime Minister Najib Razak has survived a political scandal over dubious payments he received. He has also managed to tame debt at the sovereign fund he championed. Though his position looks secure, low oil prices and racial divisions will test efforts to repair his legacy.

Malaysia scrubs out half its sovereign fund stain

31 Dec 2015

A $1.7 bln land deal with a Malaysian-Chinese group brings the financial cleanup of the world’s most troubled SWF nearer completion. The overhaul of 1MDB by boss Arul Kanda is impressive. He could now move to redeem a controversial $3 bln bond sold by Goldman Sachs.

Malaysia remains fragile despite China power deal

24 Nov 2015

Troubled sovereign fund 1MDB will sell power assets to China’s CGN for $2.3 bln. To resolve its debt woes, the investor still needs to execute a larger bailout deal with Abu Dhabi. Even then, graft probes will keep up the pressure on Malaysia’s prime minister and the currency.

Malaysia’s slashed oil dividend is still too high

12 Nov 2015

State-owned Petronas will cut next year’s payout by 40 pct to $3.7 bln. That’s painful for a country which depends on the group for one third of federal revenues. But unless oil prices recover, or Petronas cuts costs, it will have to dip into cash reserves to finance the payout.

AirAsia buyout could fly with fancy

7 Oct 2015

Co-founder Tony Fernandes would need about $800 mln of additional financing to take the embattled budget carrier private. Though buyouts are rare in the cyclical industry, it could make sense for investors willing to bet on a Malaysian recovery and on oil prices staying low.

Abu Dhabi creates overhang risk for Malaysia bank

29 Sep 2015

Gulf fund Aabar may refuse to take up RHB Capital’s $565 mln rights issue despite owning one fifth of the lender. Though underwriters will step in, excess shares would weigh on RHB. The snub would also prompt worries Aabar may join foreign investors selling out of Malaysia.

Malaysia’s weak currency may power 1MDB cleanup

24 Sep 2015

The scandal-hit fund is seeking to ease its financial woes by selling power assets it bought for $2.8 bln. Despite the political storm and ownership limits, overseas bidders are interested. The falling ringgit, and 1MDB’s need to justify past deals, may give them the upper hand.

1MDB crisis will weigh on sovereign investors

11 Sep 2015

The Malaysian outfit has spawned one of the sector’s worst scandals. Emirati backer IPIC could be on the hook for $7 bln. Neither is a typical sovereign wealth fund, and that is a large part of the problem. But the fallout could still affect their more traditional peers.

Malaysia fund mess gives Abu Dhabi no good options

28 Aug 2015

Troubled 1Malaysia Development Berhad denies a state-backed fund is pulling a $5 billion lifeline. Abu Dhabi’s relationship with 1MDB has become an embarrassment, and Malaysia’s sliding currency complicates the bailout. But walking away would make things worse for the Gulf state.

Asian capital controls are a real risk once again

21 Aug 2015

Malaysia’s prime minister has ruled out a repeat of the country’s 1998 hot money curbs. But slumping Asian currencies suggest it’s too soon to be complacent. Raising interest rates could mean deep recessions. Some politicians might decide to prevent capital from leaving instead.

Malaysia’s hefty oil dividend is unsustainable

18 Aug 2015

State-owned Petronas is cutting capex and costs but maintaining its payout despite falling oil prices. The group contributes about one third of Malaysia’s federal revenues. Political pressure to keep filling the troubled government’s coffers may weigh on future profitability.

Breakdown: Malaysia’s sovereign fund scandal

14 Aug 2015

Prime Minister Najib Razak is fighting for survival after $700 mln was found to have landed in his personal bank accounts. It’s the latest twist in a saga involving troubled fund 1MDB that has fueled concerns about the already-fragile economy. Breakingviews assesses the fallout.

Malaysia mess puts Goldman Sachs in the hot seat

6 Aug 2015

The Wall Street firm raised lots of money very quickly for state-backed 1MDB. Though the deals earned Goldman outsized fees, a brewing political scandal involving the fund leaves the bank exposed and raises questions about its processes for vetting reputational risk.

Malaysian crisis could do lasting financial damage

30 Jul 2015

Prime Minister Najib Razak’s sacking of his deputy opens the door to a protracted power struggle. The economy can ill-afford it. Fading consumer and investor confidence and a slumping currency could mean a long period of high interest rates, anaemic growth and soured loans.

Graft crisis exposes Malaysia’s macro weakness

6 Jul 2015

Prime Minister Najib Razak denies stealing state funds, and says his predecessor is trying to oust him. There’s little room to cut rates and the ringgit is plumbing 16-year lows. With growth slowing, exports falling, and Greece rocking world markets, Kuala Lumpur is in a bind.

Life after default: Malaysia’s tips for Greece

3 Jul 2015

The Asian country shunned an IMF lifejacket in 1998. Greece could soon be in a similar boat. Breakingviews imagines former leader Mahathir Mohamad’s advice to Greek PM Alexis Tsipras: devalue, fix the banks, and boost spending – but don’t bother jailing your finance minister.

AirAsia takes multi-stop route to capital-raising

18 Jun 2015

Concerns over debt and accounting have hammered shares in Asia’s largest budget carrier. It says a rights issue isn’t needed and can recoup cash from overseas offshoots. But this requires investors to put fresh capital into the loss-making affiliates. That won’t be an easy sell.