The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Malaysian PM Anwar Ibrahim Faces Backlash Over BlackRock Deal
Malaysian Prime Minister Anwar Ibrahim, a vocal critic of Israel due to its conflict with Hamas, is now defending a multi-billion dollar airport privatization deal involving BlackRock Inc., despite pressure from domestic critics to cancel the agreement over BlackRock's ties to Israel.
Key Takeaways:
- Investment Concerns: Anwar addressed parliament, stating it is "not realistic" to sever ties with companies over their links to Israel, aiming to reassure U.S. investors about the government’s stance on BlackRock, which acquired Global Infrastructure Partners (GIP) — part of the consortium taking over Malaysia Airports Holdings Bhd — for 12.3 billion ringgit ($2.6 billion).
- Strategic Partnerships: “The collaboration between Malaysia Airports and GIP is critical for us,” Anwar said at an American Malaysian Chamber of Commerce luncheon. He emphasized the importance of foreign investments from the U.S., including BlackRock.
- Political Ramifications: The controversy tests Anwar’s support for Palestinians and Hamas while balancing domestic politics and courting global investors. Malaysia, a Muslim-majority country, does not have trade or diplomatic ties with Israel.
Political Analysis: Adib Zalkapli, a political analyst, noted significant political capital has been spent defending the deal, cautioning that canceling it could harm Malaysia’s reputation.
Deal Structure: Announced on May 15, the privatization deal values the airport operator at approximately $3.9 billion, with 70% of the company remaining under Malaysian control through sovereign wealth fund Khazanah Nasional Bhd and the Employees Provident Fund. The remaining stake will be held by Abu Dhabi Investment Authority and GIP.
Advisor Insights: Anwar’s advisors believe selective treatment of companies based on Palestinian issues is untenable, noting other major investors like Vanguard Group also have substantial investments in Israel.
GIP's Stance: GIP has stated that BlackRock will not be involved in privatizing Malaysia Airports, maintaining full control under GIP's existing leadership.
BlackRock's Influence: BlackRock holds significant investments in Malaysia’s largest companies, valued at nearly $5.8 billion in equities and government bonds.
Local Reaction and Global Implications: The BDS movement, which advocates for boycotting, divesting, and sanctioning Israel, has found support in Malaysia. However, its impact on BlackRock is limited, as the company can still buy Malaysian shares on the open market.
Political Opposition: The deal has stirred political tensions ahead of a local election on July 6, with opposition politicians labeling Anwar as “America’s adopted child” and some cabinet members expressing unease.
Anwar’s Response: At the AmCham Malaysia luncheon, Anwar dismissed the criticism as politically motivated. He noted the local by-election has fueled the controversy, with allegations and aspersions being cast.
Additional Highlights:
- BDS Movement Impact: Malaysia's strong anti-Israel sentiment has led to boycotts of global brands perceived to have ties to Israel, affecting local franchises and jobs.
- Regulatory Attention: The UK’s Competition and Markets Authority and the US Federal Trade Commission are also examining the balance of power between Microsoft and OpenAI, spurred by the controversial firing and rehiring of Sam Altman at OpenAI, with Microsoft's CEO Satya Nadella playing a key role.
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