5 things you need to know

1 Malaysia has cancelled two China-linked mega infrastructure projects: the RM81 billion ($27 billion) East Coast Rail Line (ECRL) and two gas pipelines worth RM9.4 billion — the Trans-Sabah Gas Pipeline (TSGP) and the Multi-Product Pipeline (MPP). The Malaysian Finance Ministry had suspended the projects last month amid concerns about cost.

On Aug 21, Malaysian Prime Minister Dr Mahathir Mohamad (pictured, left) said Chinese President Xi Jinping and Premier Li Keqiang (pictured, right) empathised with his decision to scrap the projects. “There were some misunderstandings, but now they [have] understood why we [decided so]. I don’t think China wants us to be bankrupt,” Mahathir told reporters at the end of his five-day trip to Beijing.

The ECRL is a rail project connecting Malaysia’s east and west coasts. The TSGP comprises a 662km gas pipeline from the town of Kimanis to Sandakan and Tawau in Sabah. The MPP involves building a 600km petroleum pipeline from Jitra, Kedah to Port Dickson, Negeri Sembilan.

The projects were signed by the previous Malaysian administration with Chinese state-owned enterprises. China Communications Construction Co is the main contractor for the ECRL. The pipeline projects were awarded to China Petroleum Pipeline Bureau.

In July, however, Malaysia’s Finance Ministry said it had uncovered irregularities in the projects. For instance, 88% of the RM9.4 billion contract value of the pipelines had been drawn down, but only 13% of the works had been completed.

The cancellations have drawn criticism from some Barisan Nasional politicians. Wee Ka Siong, president of the Malaysian Chinese Association, says halting these projects could upset China while taking away economic opportunities for poorer communities. “Those living in the east coast will be deprived of development and will continue to be sidelined, compared with their counterparts in the west coast,” Wee says of the decision to axe the ECRL.

2 US President Donald Trump has denied directing any breach of election campaign financing laws, after his former personal lawyer Michael Cohen said otherwise. On Aug 22, Cohen testified in a New York federal court that he arranged payments for the “principal purpose” of influencing the 2016 presidential election. Without naming Trump directly, Cohen said he acted at the direction of a candidate for federal office.

Cohen has pleaded guilty to one count of wilfully causing an unlawful corporate campaign contribution, and another of making an excessive campaign contribution. Both charges are linked to alleged hush money paid by Cohen to two women who had sexual relations with Trump – adult film actress Stephanie Clifford, also known as Stormy Daniels, and former Playboy model Karen McDougal.

In a Fox News interview, Trump said the payments were from himself and not his campaign. He claims, however, that he only found out about them “later on”. “In fact, my first question when I heard about it was, did [the payments] come [from] the campaign? Because that could be a little dicey,” Trump said.

Separately, Cohen has pleaded guilty to five counts of tax fraud and one count of making false statements to a financial institution. Under a plea bargain entered with prosecutors, Cohen faces a possible prison sentence of up to five years and three months.

Meanwhile, a federal jury has convicted Trump’s former campaign chairman Paul Manafort on eight charges of bank and tax fraud and failure to disclose a foreign bank account. Both legal cases against Cohen and Manafort arose from special counsel Robert Mueller’s probe into possible Russian meddling in the 2016 presidential election.

3 The rally in US stocks that began after the 2008 global financial crisis has now turned into the longest bull market run in history. As at Aug 22, the Standard & Poor’s 500 had gone 3,453 days without slipping 20% or more, which would have sent it into bear territory. On an annualised basis, S&P 500 stocks have returned 16.5% since 2009.

Gains were led by the US tech companies collectively known as the FAANG stocks – Facebook, Amazon.com, Apple, Netflix and Google’s parent company Alphabet. Reasons for the prolonged run include the low base from which the rally began and growth fuelled by the central bank’s low interest rates.

The market milestone comes as investors’ focus turns to the annual Jackson Hole symposium, which started on Aug 24. DBS Group Research expects the Fed to reaffirm its gradual rate hike path at the meeting. “The Fed may look past emerging market stress again and lift the Fed funds rate above its 2% inflation target to 2.25% at its next [Federal Open Market Committee] meeting on Sept 26. The DXY (USD) Index has recovered more than half of its depreciation seen between January 2017 and February 2018,” the analysts write in an Aug 17 report.

4 Saudi Arabia has denied reports that it is scrapping plans to take its national energy company Saudi Aramco public. On Aug 23, Saudi Minister of Energy, Industry and Mineral Resources Khalid al-Falih says the government remains committed to the IPO “at a time of its own choosing when conditions are optimum”.

“This timing will depend on multiple factors, including favourable market conditions and a downstream acquisition that the company will pursue in the next few months,” says al-Falih, who is also chairman of Saudi Aramco.

The kingdom’s comments came after reports of the IPO being cancelled. According to sources, the listing is now less urgent as oil prices have recovered, improving Saudi Arabia’s financial health. The IPO is set to be the largest in history, with Saudis hoping for the company to achieve a valuation of US$2 trillion ($2.7 trillion).

5 Singapore’s sovereign wealth fund GIC has bought a “significant minority stake” in Indian property developer Provenance Land. The company brought India its first international hotel operator, Hyatt, in 1980. Provenance has developed five greenfield hospitality projects in India.

Provenance now owns a mixed-use development on four acres of freehold land in Worli, Mumbai. It comprises the 202-room Four Seasons Hotel Mumbai, the 41-unit Four Seasons Private Residences Mumbai, which is being constructed, and a proposed office tower.

The Worli project is a “unique” investment opportunity, says GIC Real Estate chief investment officer Lee Kok Sun in a press statement. “In addition to the exclusive Four Seasons properties, the proposed office development is an attractive proposition, given continued demand for quality office space and expected long-term rental growth in Mumbai.”