This newsletter was first published in Slice of P.I.E LinkedIn page here.

There’s Debt Troubles Brewing in the World

In last month’s newsletter, we highlighted the growing concerns over debt in the U.S. and China also. The U.S. had its credit rating downgraded to AA+ from AAA, causing a sudden short panic in the stock markets.

You see, while the world’s debt to gross domestic product (GDP) share has been coming down to 238% in 2022 from 258% in 2020, this high debt is driven by the world’s two biggest economies in the world. China’s debt to GDP rose from 265% in 2021 to 272% in 2022. Meanwhile, U.S.’ debt to GDP is at 274% in 2022.

What does this mean for you as an investor? Your portfolio valuations might be getting lower with higher debt levels in these countries. And when some companies are not able to repay, this means other countries which are big trading partners are in it too.

Messi’s Impact on Apple’s Topline and Why it Matters

Messi rejected a US$1 billion deal to play in Saudi Arabia. Instead, he signed with Inter Miami for US$150 million over two and a half years. The caveat is that he will get a cut from Apple TV’s Major League Soccer Pass subscription. This is the equivalent of taking an equity stake in a company for its future profits. This has turned out well for both Apple and Messi. Messi is enjoying a resurgence in his own popularity, since his disastrous sting in Paris Saint Germaine. Meanwhile, Apple’s MLS pass increased by 110,000 on 21 July 2023, where the day before just saw 6,143. Guess how much is a season pass? US$12.99 per month.

BYD: Buffet’s Preferred EV Company in China

Warren Buffet currently owns about 6% of BYD, a Chinese electric vehicle maker. What makes BYD special in this case for it to be in Buffet’s good books? In the world, BYD is the second biggest EV maker where Tesla is the top producer. Hence, in China, it is the biggest compared to the other EV players with a market capitilization of US$97 billion.

In 2022, it almost doubled its revenue to HK$480 billion from HKD256 billion in 2021. To top it off, BYD is profitable, earning HK$21 billion with a profit margin of 4.4%. Furthermore, BYD generated the most operating cash at HK$164 billion in the last 10 years.

Malaysia‘s 12th Economic Plan – 5% to 6% Growth?

Malaysia just unveiled its mid-term review of the 12th Malaysia Plan Economy. Here’s the main point. the government projects that Malaysia will grow at a range of 5% to 6% until 2025. This got a lot of players in the industry heated in arguments and discussion. Most think that this is too optimistic given that

• The global economy has recovered but remained weak for now especially China.
• Global interest rates remained high as the Federal Reserve seem relentless in its objective to bring down inflation.
• There is a lack of big catalysts that could drive growth in Malaysia.

Regardless of who’s right, there is a sense that many Malaysians are now more optimistic about the political direction. Discussions are more robust now and we should welcome that for sure!