Iran targets US bases in Kuwait and Bahrain

Good morning. Here’s what happened overnight and what you need to know today.

1.

Truce or dare: Iran launched missiles and drones at US military sites in Kuwait and Bahrain on Sunday in a fourth day of hostilities that has eroded an interim ceasefire meant to end the conflict and reopen the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps said its navy and air forces had targeted the Ali Al Salem Air Base in Kuwait and a US naval base in Bahrain in retaliation for US strikes. Kuwait said it intercepted two ballistic missiles while Bahrain reported an Iranian drone had damaged a residential building in Muharraq, with no casualties on either side. The exchanges began on Thursday when Iran struck a container ship, prompting US strikes the following day, with Washington hitting Iranian military targets again over the weekend after a tanker carrying Qatari oil was attacked. Both sides accused the other of violating the agreement. “There may come a point when we are no longer able to be reasonable, and will be forced to militarily complete the job that we very successfully started,” US President Donald Trump posted on Truth Social, adding Iran would “no longer exist" if forced back to war. A senior US official told The New York Times technical talks were still planned for the coming days and that no talks had been cancelled. (Capital Brief)(Reuters)(Bloomberg) (NYT)(FT)

2.

Batam up: Firmus Technologies signed a strategic partnership with Nvidia anchored by a 360-megawatt data centre campus in Batam, Indonesia. The company told media the agreement would see it buy Nvidia infrastructure and sell Nvidia-powered cloud services to “AI Native” customers, earning the US-listed chip giant both product revenue and a share of cloud revenue. The deal covers up to 170,000 Nvidia AI accelerator chips through 2027 and 2028 and Firmus expects to earn between USD25 billion and USD30 billion from committed offtake agreements during its first six years. The eight-year partnership runs until 2034. Co-chief executive Tim Rosenfield also told The Australian the company had pulled back on the timing of its expected ASX float. “We’ve been pretty open about our desire to come to the public market. But we’re not in a position where we need to do it to someone else’s timetable. We’re doing it to the timetable that suits the business,” he said. Firmus in April said it was valued at USD5.5 billion in a funding round led by Coatue Management and backed by Nvidia. (Reuters)(Bloomberg)(The Australian)

3.

Leverage buyout: Clinical research giant Novotech allegedly increased the size of a secret payout to $8 million after its former CFO threatened to go public with allegations including that he was pressured to come up with specific profit numbers ahead of its sale, The Australian Financial Review reported. The allegations were contained in a draft affidavit prepared by Rob Speedie, a former senior TPG executive whom the firm installed as Novotech’s chief financial officer in 2022, and who departed last year after “collapsing” (read fainted) on a video call with Asian investors. In January he was offered less than $300,000 as an exit payment, but in May Novotech drew up a confidential settlement to pay him $8 million over two years, including a $3.3 million bonus for completing the company’s sale and $242,190 as a “damages payment” for “injuries” he sustained, according to the report. All parties reportedly signed strict NDAs and agreed to destroy the draft affidavit. Speedie alleged TPG’s co-head of healthcare Vincent Wong pressured him on earnings forecasts, writing that he should “please keep in mind” a $95 million EBITDA figure that lenders had been told to expect. A Novotech spokesman said the company “categorically denies the allegations” and that a third-party investigation found no evidence to support them. (AFR)

4.

Hype cycle: The Bank for International Settlements warned that a bust in artificial-intelligence investment now ranks among the gravest threats to the global economy, as well as resurgent inflation and mounting fiscal strain, according to its annual economic report. The Basel-based body said disappointing returns could trigger a sudden pullback in financing and turn the AI capex boom into a protracted investment bust, with knock-on effects for financial conditions. The warning comes as the five biggest hyperscalers are expected to invest more than USD1 trillion from 2025 to the end of 2026. The BIS likened a potential AI-driven repricing of risk to the disruption of the 2008 financial crisis, and said a major equity-market correction could hit households harder than in the past because they hold more shares relative to their wealth and income. It also warned that any tightening in credit conditions could expose vulnerabilities in the less transparent private credit market, where direct lending funds catering to retail investors have already faced mounting redemption requests, forcing some to liquidate assets. Direct lending funds have quadrupled their exposure to the AI and information-technology sectors over the past five years to about 15% of their portfolios, raising concentration risks, the BIS said. (BIS) (Bloomberg)(FT)

5.

Aramco crash: A helicopter operated by Saudi Aramco crashed on Sunday in Ras Tanura on Saudi Arabia’s eastern Gulf coast, killing all 14 people on board. The crash took place at 6am local time (1:00pm AEST), the state news agency said, adding that the cause was unknown and relevant authorities had launched a full investigation. All 14 victims were Saudi nationals, according to the Saudi Press Agency. The crash came during a weekend when tensions rose in the Middle East, as the US and Iran attacked each other’s military infrastructure, straining a recent interim peace deal. It was one of three aviation accidents over the weekend. In Beijing, a single-engine light aircraft crashed into the 109-storey CITIC Tower, the city’s tallest skyscraper, on Friday afternoon, killing the pilot and injuring 13 others. Separately, eleven people died after a light aircraft used by a parachutist school crashed in the town of Tomblaine in eastern France on Sunday. The pilot and 10 skydivers were killed, including five students and five instructors. (SPA)(Reuters)(Bloomberg)(BBC)

6.

‘Difficult period’: Russian President Vladimir Putin acknowledged on Sunday that fuel supply problems had created shortages across Russian regions and said a task force was working round the clock to ensure sufficient supplies, after Ukraine struck two oil refineries overnight. Addressing a meeting of senior officials, Putin said Russia had to minimise the effects of Ukrainian drone strikes on oil installations linked to the shortages. “Unfortunately, there are still queues at gas stations too,” he said, according to accounts published by Russian news agencies. He said gasoline reserves stood at 1.7 million metric tonnes and that a complete ban on diesel exports was under consideration. Ukrainian President Volodymyr Zelenskiy said his forces hit refineries in the Krasnodar and Yaroslavl regions, describing the attacks as part of Kyiv’s “long-range sanctions” campaign. A fire broke out at the Slavyansk-na-Kubani refinery, with one person killed and another injured nearby, Krasnodar governor Veniamin Kondratiev said. Average gasoline prices in Russia rose 3% in the week to 22 June, the biggest weekly increase in at least 20 years, Bloomberg reported. (Reuters)(AP)(Bloomberg)

7.

Trust issues: Most Australians trust the ABC, but One Nation supporters buck the trend, fresh DemosAU data provided to Capital Brief shows. The ABC remains the country’s most trusted source of news, with 60% of the public saying they “usually” or “sometimes” trust the $1.2 billion taxpayer-funded broadcaster, compared to 23% saying this is “rarely” or “never” the case. Its trusted status holds true for more than half of almost every demographic, whether by age, gender or socio-economic status. But about 45% of One Nation supporters say they have some level of trust in the ABC, compared to 76% of Labor supporters, 66% Greens and 58% Coalition. The poll of 1,502 people was undertaken between 15 and 20 May, just months after Pauline Hanson pushed to strip government funding from the national broadcaster, saying it should be “subscription only”. Tension between One Nation and the public broadcaster has escalated in recent months, with community organisation ABC Friends warning that if One Nation ends up holding the balance of power or entering Coalition government the “threat becomes existential”. (Capital Brief)

8.

Goodwill hunting: A $35 million fine against HSBC has done little to resolve things for the scam victims it was meant to vindicate, with many fearing their early settlements mean they won’t be fully reimbursed. This month the Federal Court penalised the British banking giant after it admitted a string of serious failures, including taking 144 days on average to investigate scam reports and failing to follow the ePayments code for determining who should bear the losses. HSBC first became aware of a sophisticated spoofing scam targeting its customers in May 2021, and by the time ASIC’s fine landed, many victims had been pushed into “goodwill” settlements worth a fraction of what they lost in deals that often carry non-disclosure terms and waive liability. (HSBC and AFCA both deny pressuring anyone.) Julie Khoo lost $50,000 in October 2023 to scammers impersonating HSBC staff and spoofing the bank’s caller ID and text threads. When she reported it in branch, staff told her she wasn’t the only one. “They knew exactly what was happening,” she told Capital Brief. She later accepted reimbursement of less than a quarter of what she lost. HSBC has made $21.5 million in compensation to date and is reviewing each settlement. (Capital Brief)

9.

Doubling down: The federal government will double the maximum penalty for systematic breaches of Australia’s under-16s social media ban to $99 million, accusing tech companies of “not doing enough” to keep children off their platforms. The eSafety commissioner, which is investigating potential breaches by Facebook, Instagram, Snapchat, TikTok and YouTube, will also have its information-gathering powers strengthened, allowing it to compel platforms to provide evidence of what they have done to stop under-16s opening or using an account, the government said in a statement. The penalty rises from $49.5 million, bringing it into line with competition and consumer law. “It’s clear big tech are not doing enough to comply with the law,” Prime Minister Anthony Albanese said. “There are still too many children on social media.” The government said more than 5 million accounts held by under-16s had been removed, deactivated or restricted since the ban took effect on 10 December. But a University of Newcastle study of more than 400 adolescents, published in the BMJ, found more than 85% of those aged under 16 were still using social media three months after the ban came into force. (Capital Brief)(Guardian)(Reuters)