10 May 2018

@stu7tay

10 May 2018

Good morning,

It’s been quite an evening in Malaysia, following the country’s 14th general election, where a 92-year-old man became the world’s oldest elected leader.

With all 222 seats in the country's parliament accounted for, the 113 seats won by the Pakatan Harapan (Alliance of Hope) coalition was enough to give them control of the house and deliver one of the most historic political comebacks for its leader, Mahathir Mohamad, who had not been involved in front line politics since he stepped down as prime minister in 2003 after 22 years at the helm.

And as grand as the resurgence was for Mohamad, the electorate delivered a deafening defeat for his former party, Barisan Nasional, a coalition that has ruled the country since Malaysia stopped being a British colony in 1957.

Indeed, Mohamad was considered an important mentor for current PM, Najib Razak, who has been in charge since 2008. However, Mohamad left the party in 2016 over his “embarrassment” by the corruption allegations that besieged Razak and he announced in January that he would challenge him in the election.

Crowds of Mohamad supporters took to the streets of Kuala Lumpur to celebrate the remarkable success story, but the markets struck a more cautious tone following the result.

Malaysian bonds tumbled shortly after the markets opened as uncertainty shrouded the economic policies of a man who has been away from the political limelight for many years. Mohamad has proposed abolishing a goods and services tax and the reintroduction of fuel subsidies, plans that rating agency Moody’s predict “would be credit negative” if implemented without other measures.

Large projects linked to China’s regional infrastructure initiative also await in the prime ministerial in-tray for a man who takes a rather sceptical view of the rise of China.

His age is another factor causing wariness in the markets. At 92, Mohamad has said he will only serve for two years before passing on control. The most likely candidate is Anwar Ibrahim, who represents the party’s youth policy at just 70 years old. He is currently in prison on sodomy charges and Mohamad has promised a royal pardon upon his election.

So, following two days of national holidays, the hard work begins for the new leader. And what about the prospects for Najib Razak? Perhaps the ousted PM will take inspiration from his former mentor and take some time out to plan a stunning comeback in 2046, on his 92nd birthday.

News

Iranian forces based in Syria have launched 20 artillery rockets into Israeli military positions at the Golan Heights as Tehran expressed its fury over President Trump’s decision to withdraw from the nuclear deal.

An extra week of talks on the Paris climate agreement are likely to be scheduled as UN negotiations in Bonn are set to end in stalemate today. In the two-and-a-half years since the deal was agreed, UN delegates have become increasingly stuck as they work through a number of technical and accounting rules that will make the Paris pact operational in 2020.

Donald Trump is at Andrews Air Force Base in Washington where the president will meet with three American detainees released by North Korea. The White House has said the three men had been freed as a gesture of goodwill ahead of the planned meeting between Trump and North Korean leader Kim Jong-un.

Business & Economy

Royal Bank of Scotland has agreed a $4.9bn settlement with the US Department of Justice in a deal that paves the way for the UK government to sell more shares in the bank. The settlement is lower than some predictions and the bank announced that much of it will be covered by provisions already taken. Chancellor Philip Hammond promised last year to sell a stake of up to £3bn in RBS by March of next year. (£)

BT has announced that it is to cut 13,000 jobs over the next three years as part of plans to trim its management and back-office roles. The telecoms giant said the move would save around £1.5bn, while they also revealed plans to move its headquarters out of central London to a site yet to be confirmed.

London’s housing market has suffered its worst month in nearly a decade and it is predicted that prices will continue to fall over the course of the year, new research by the Royal Institution of Chartered Surveyors has found. The survey, the latest that shows falling demand and declining property in London, found that 65% more property surveyors saw prices in the capital fall during April rather than rise, the weakest reading since February 2009.

Markets

What happened yesterday?
Energy stocks were the winners by some margin yesterday after oil prices soared to their highest levels since late 2014, following the US withdrawal from the Iran nuclear deal and renewed sanctions on the country. Brent crude rose as high as $77.43 a barrel before settling at $77.21, a rise of 3.2%.

The rising price of oil contributed significantly to the FTSE reaching a three-month high, with BP and Shell accounting for around half of the index’s 1.1% gain. The index outperformed the Europe-wide Stoxx 600 by 0.6%.

While sterling remained flat at $1.3544, the dollar slipped back, having hit gains not seen since last December.

The Argentine peso was down a further 1.2 per cent at 22.664 pesos per dollar following the news that the country is to commence talks about a financing deal with the International Monetary Fund (IMF) as it seeks around $30bn (£22bn). It hit a record intraday low of 23.1 on Tuesday.

Finals
BT Group
Stobart Group Ltd.

Interims
On The Beach Group
UK Economic Announcements
(00:01) RICS Housing Market Survey
(08:30) Industrial Production
(09:30) Balance of Trade
(09:30) Manufacturing Production
(12:00) BoE Interest Rate Decision

Int. Economic Announcements
(13:30) Consumer Price Index (US)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)

Columns of Note

Former deputy prime minister, Nick Clegg, sets out in the FT why the Netherlands, so often an ally of the UK, is emerging as one of the most pivotal countries in the EU. He predicts that the country’s prime minister, Mark Rutte, will step out of the UK’s shadow and become the eurozone’s leading advocate of free trade and economic liberalisation. (£)

In The Times, Iain Martin asks: “what if Donald Trump is right about Iran?” Martin welcomes the change in tack on American policy and says a disruptive approach unblocked an impasse in North Korea and was worth repeating if it sees Iran “ditch the Islamic revolution and rejoin the community of nations”. (£)

Did you know?

There is a rare condition called Highly Superior Autobiographical Memory (HSAM) that just 60 people in the world are known to have. The condition makes the person remember precise details of every day in their life.

Parliamentary highlights

TODAY

House of Commons

Oral Questions

Digital, Culture, Media and Sport (including Topical Questions)
Attorney General

Select Committee Statement: Third Report of the Health and Social Care Committee and the Sixth Report of the Education Committee, The Government's Green Paper on mental health: failing a generation, HC 642 - Dr Sarah Wollaston

House of Lords

Oral Questions

Stopping children being recruited into gangs - Baroness Kennedy of Cradley
Ensuring there is sufficient funding for local government children's services - Lord Bassam of Brighton
Government efforts alongside the BBC as part of the review of the Childhood Obesity Plan for Action - Lord Brooke of Alverthorpe
Ensuring grandparents have a more effective legal right to see their grandchildren - Lord Farmer

Legislation

Modern Slavery (Victim Support) Bill [HL] - Third reading - Lord McColl of Dulwich
Civil Liability Bill [HL] Committee stage (day 1) - Lord Keen of Elie

Scottish Parliament

General Questions

First Minister’s Questions

Scottish Government Debate: A Route Map to an Energy Efficient Scotland

TOMORROW

House of Commons

Legislation

Parental Bereavement (Leave and Pay) Bill - remaining stages - Kevin Hollinrake
Representation of the People (Young People's Enfranchisement) Bill - 2nd reading - Peter Kyle
National Health Service (Co-Funding and Co-Payment) Bill - 2nd reading - Sir Christopher Chope

House of Lords

Legislation: Refugees (Family Reunion) Bill [HL] - Committee stage - Baroness Hamwee

Scottish Parliament

No business scheduled