Weekly Market Update - 22 August 2022

Electric Shock

The Chinese province of Sichuan extended industrial power cuts and activated its highest emergency response to deal with “extremely outstanding” electricity supply deficiencies, adding to manufacturers’ woes in the region as they shut down factories. Blistering temperatures and scant rainfall since July, along with surging demand for air conditioning, have caused gaps in power supply. The power shortage adds another challenge to companies already contending with Beijing’s efforts to stamp out Covid, which include sudden lockdowns and movement curbs.

Source: Bloomberg

War Games

The US and South Korea will begin their biggest joint military exercise in about five years after a hiatus on large-scale exercises that failed to entice North Korea’s Kim Jong Un to make concessions in disarmament talks. The drills are expected to involve thousands of military personnel, and will run for two weeks starting Monday. The US and South Korea have said they are defensive in nature and will include exercises to coordinate forces in response to an invasion from North Korea. An angry response is almost certain from North Korea, which for decades has assailed joint exercises as a prelude to invasion and nuclear war.

Source: Bloomberg

1MDB Scandal

Former Malaysian premier Najib Razak will serve 12 years in prison after losing his final appeal in a trial related to the 1MDB scandal — the investment fund that saw billions of dollars siphoned across the globe. The court ruling prevents Najib, 69, from contesting in the next general election that must be held by September 2023. He will go down in history as becoming the first prime minister in the Southeast Asian country to be convicted and imprisoned. There is a glimmer of hope for him — he could eventually get out by jail by seeking a pardon from Malaysia’s king.

Source: Bloomberg