Mission Grey Daily Brief - September 04, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains dynamic, with ongoing geopolitical tensions and economic shifts. In Europe, Germany faces economic woes and a rising far-right, while Turkey and Egypt seek to strengthen ties. Putin's visit to Mongolia sparks controversy due to an ICC arrest warrant. China faces pressure from Biden's climate negotiator and is accused of spreading disinformation ahead of the US election. Iran faces scrutiny for a surge in executions. Mexico's new president takes office amid concerns over Cuban influence.
Germany's Economic and Political Challenges
Germany's economy faces challenges, with Volkswagen and Intel reconsidering their investments. High energy costs, reduced demand from China, and competition from low-cost Chinese manufacturers have impacted Germany's manufacturing sector, which has been in recession since 2022. German companies are investing more in the US, and less in China and Germany. This trend may continue as companies seek to reduce costs and maintain profitability.
Turkey-Egypt Relations
Turkey and Egypt are seeking to strengthen their relationship, with Egyptian President Abdel Fattah el-Sisi visiting Ankara. They plan to sign agreements on economic, trade, energy, and other issues, with a goal to increase trade volume to $15 billion in five years. They will also discuss the war between Israel and Hamas and provide humanitarian aid to Gaza. This marks a turning point in Turkish-Egyptian ties, indicating a normalization of relations between the two countries.
Putin's Visit to Mongolia
Russian President Vladimir Putin visited Mongolia, despite an International Criminal Court (ICC) arrest warrant. Mongolia's failure to arrest him was criticized by Ukraine as a blow to international justice. Putin received a warm welcome, including a red-carpet reception from his Mongolian counterpart. This visit highlights the tensions between those seeking to hold Putin accountable and countries that continue to engage with Russia.
China's Disinformation Campaign and Climate Negotiations
China is accused of spreading disinformation ahead of the US election, with a network of fake accounts posing as American voters to criticize politicians and sow division. This campaign, known as "Spamouflage," has been identified by researchers and is believed to be a Chinese state-run operation. Meanwhile, Biden's top climate negotiator will visit Beijing to press Chinese leaders to cut greenhouse gas emissions. This trip is seen as a final opportunity before the November election to push China to act on global warming.
Risks and Opportunities
- Risk: Germany's economic woes and the potential exit of major companies could lead to further political instability and a rise in populism, impacting the business environment.
- Opportunity: Turkey and Egypt's improved relations open up opportunities for businesses in both countries, particularly in the economic, trade, and energy sectors.
- Risk: Putin's visit to Mongolia highlights the potential for countries to shield him from the ICC arrest warrant, which could impact international relations and efforts to hold him accountable.
- Risk: China's disinformation campaign aims to undermine confidence in US elections and democracy. Businesses should be aware of potential social and political instability caused by such campaigns.
- Opportunity: Biden's climate negotiator visiting China presents a chance for progress on emissions reductions, which could benefit companies investing in or transitioning to renewable energy.
Iran's Surge in Executions
A United Nations report finds that executions in Iran surged in August, with a lack of transparency surrounding the official numbers. Nearly half of the executions were related to drug offenses, which goes against international standards. Iran's government is urged to halt all executions to prevent the potential loss of innocent lives.
Mexico's New President and Cuban Influence
Mexico's president-elect, Claudia Sheinbaum, will take office soon. There are concerns about the influence of Cuba, particularly the role of Havana in overseeing the dismantling of democracy in Mexico, similar to Venezuela and Nicaragua. Sheinbaum's policies and actions will shape Mexico's political and economic landscape, with potential implications for businesses operating in the country.
Recommendations for Businesses and Investors
- Monitor Germany's economic and political situation, and be prepared for potential instability and policy shifts.
- Explore opportunities in Turkey and Egypt, particularly in sectors targeted by their agreements, such as energy, trade, and investments.
- Consider the potential implications of Putin's visit to Mongolia and the response from Ukraine and the ICC.
- Be vigilant against disinformation campaigns targeting elections and democracies, and support efforts to counter such activities.
- Stay informed about China's progress on emissions reductions and explore opportunities in renewable energy.
- Businesses in Mexico should closely follow policy changes under the new president and assess their potential impact on operations.
Further Reading:
'The ideological spirit and forces driving regime change in Mexico are from Havana' - DIARIO DE CUBA
Biden’s Top Climate Negotiator to Visit China This Week - The New York Times
China is pushing divisive political messages online using fake U.S. voters - NPR
China-linked 'Spamouflage' network mimics Americans online to sway US political debate - ABC News
Erdoğan to host Egyptian President el-Sisi in Ankara - Hurriyet Daily News
Is Germany in crisis? Giants consider pulling billions from economy - Fortune
Themes around the World:
Energy export logistics bottlenecks
Longer voyages, tankers idling offshore, and ice conditions around Baltic ports are delaying loadings and reducing throughput, while ports face stricter ice-class and escort rules. Combined with sanctions-driven rerouting, this increases freight rates, demurrage disputes, and delivery uncertainty for energy and commodities.
Ports, corridors, and logistics buildout
Cairo is rolling out seven multimodal trade corridors, 70 km of new deep-water berths, and a network targeting 33 dry ports. New financing such as the $200m Safaga terminal (with $115m arranged) supports capacity, inland clearance, and supply-chain resilience.
Fiscal tightening and tax risk
War-related spending pressures and a higher deficit underpin expectations of fiscal consolidation. IMF recommendations include raising VAT and minimum income tax rates and cutting exemptions, implying higher operating costs, price pass-through challenges, and possible shifts in incentives for investment and hiring.
Chip supply-chain reshoring pressure
Washington is pushing Taiwan to expand US semiconductor capacity, with floated targets up to 40% and threats of sharp tariff hikes if unmet. Taipei says large-scale relocation is “impossible,” implying sustained negotiation risk, capex uncertainty, and bifurcated production footprints for customers.
Defence spending surge reshapes supply
Budget passage unlocks a major defense ramp: +€6.7bn in 2026 (to ~€57bn), funding submarines, armored vehicles and missiles. This boosts demand for aerospace, electronics and metals, but may crowd out civilian spending and tighten skilled-labor availability.
Secondary sanctions and “tariff sanctions”
The U.S. is expanding extraterritorial pressure via secondary sanctions and even tariff penalties tied to dealings with sanctioned states (notably Iran). Firms trading through third countries face higher legal exposure, payment friction, disrupted shipping, and forced counterparties screening.
Crypto-based payments and enforcement
Sanctions and FX scarcity are accelerating use of crypto and stablecoins for trade settlement and wealth preservation, drawing increased OFAC attention and first-time sanctions on exchanges tied to Iran. This raises AML/KYC burdens and counterparty screening complexity for fintech and traders.
Corporate governance push on cash
Draft revisions to Japan’s corporate governance code would pressure boards to justify large cash/deposit hoards and redirect funds into growth investment. This supports M&A, capex and shareholder returns, but raises expectations on ROIC, disclosure and activist engagement for listed firms.
Semiconductor controls and compliance risk
Export controls remain a high‑volatility chokepoint for equipment, EDA, and advanced nodes. Enforcement is tightening: Applied Materials paid $252m over unlicensed shipments to SMIC routed via a Korea unit. Multinationals face licensing uncertainty, audit exposure, and rerouting bans affecting capex timelines.
US–Indonesia reciprocal tariff reset
A new US–Indonesia reciprocal trade agreement lowers US tariffs on Indonesian goods to ~19% while Indonesia removes tariffs on most US products. Expect near-term changes in market access, compliance requirements, and competitive pressure in textiles, agribusiness, and manufacturing.
Workforce nationalisation and labour reforms
Saudi authorities are tightening Saudization in selected functions (e.g., sales/marketing mandates reported up to 60% for targeted roles) alongside broader labour-law amendments. Firms must redesign HR operating models, pay structures, and compliance controls to avoid penalties and operational disruption.
Energia: gás, capacidade e tarifas
Leilões de reserva de capacidade em março e revisões regulatórias buscam garantir segurança energética e reduzir custos de térmicas a gás. Gargalos de transmissão e curtailment elevam risco operacional e custo de energia, importante para indústria e data centers.
Sanktionsdurchsetzung und Exportkontrollen
Strengere Durchsetzung von EU-Russland-Sanktionen erhöht Compliance-Risiken. Ermittler deckten ein Netzwerk mit rund 16.000 Lieferungen im Wert von mindestens 30 Mio. € an russische Rüstungsendnutzer auf. Unternehmen müssen Endverbleib, Zwischenhändler und Dual-Use-Checks deutlich verschärfen.
Semiconductor protectionism and reshoring
A targeted 25% tariff on certain advanced AI chips, coupled with Section 232 investigations and “tariff offset” concepts, aims to accelerate domestic capacity. Firms face higher component costs, potential broader duties on derivative products, and pressure to localize manufacturing and secure chip inputs.
Canada pivots trade diversification
Ottawa is explicitly pursuing deeper trade ties with India, ASEAN and MERCOSUR to reduce U.S. dependence, while managing frictions around China-linked deals. Exporters may see new market access and compliance needs, but also transition costs, partner-risk screening and logistics reorientation.
Macrostability via aid and reserves
Despite war shocks, NBU policy easing to 15% and a reserves build to a record ~$57.7bn (Feb 1, 2026) reflect heavy external financing flows. This supports import capacity and FX stability, but leaves businesses exposed to conditionality, rollover timing, and renewed energy-driven inflation.
Lojistik ve demiryolu koridorlarının güçlenmesi
Ford Otosan’ın Romanya–Kocaeli araç taşımada Marmaray üzerinden demiryolu koridoru kurması ve yeni hızlı tren projeleri, Türkiye–Avrupa tedarik zincirinde süre/karbon avantajı sağlayabilir. Liman entegrasyonu, kapasite tahsisi ve gümrük süreçleri operasyonel performansı belirleyecek.
Semiconductor supercycle and capacity
AI-driven memory demand is lifting Samsung Electronics and SK hynix earnings and prompting large 2026 capex. Tight supply and sharply rising DRAM contract prices could raise input costs for global electronics, while boosting Korea’s export revenues and supplier investment opportunities across equipment and materials.
Aviation and airspace disruption
Airlines have suspended or limited services to Tel Aviv and avoided Israeli and nearby airspace during spikes in regional tension. This constrains executive travel and air cargo capacity, pushes shipments to sea/third-country hubs, and complicates time-sensitive logistics.
USMCA renegotiation and North America risk
Signals of a tougher USMCA review and tariff threats elevate uncertainty for integrated US‑Canada‑Mexico manufacturing, notably autos and batteries. Firms should stress-test rules-of-origin compliance, cross-border inventory strategies, and contingency sourcing as negotiations and enforcement become more politicized.
Policy disruption from shutdown risks
Repeated funding standoffs—recent partial shutdowns and DHS funding cliffs—delay economic data releases, create operational uncertainty for agencies affecting travel, disaster response, and cybersecurity, and inject timing risk into regulated processes and government-dependent contracts for international firms.
Defense industrial expansion and offsets
Large US arms packages and Israel’s push to shift from aid toward joint projects and local production strengthen domestic defense supply chains. This creates opportunities in aerospace, electronics, and dual-use tech, while increasing export-control and end-use scrutiny.
Digital economy and data centres
Ho Chi Minh City is catalysing tech infrastructure: announced frameworks include up to US$1bn commitments for hyperscale AI/cloud data centres and a digital-asset fund. Gains include better digital services and compute capacity, but execution depends on power reliability, approvals and data-governance rules.
Security threats to supply chains
Cargo theft, extortion and increasingly sophisticated freight fraud raise insurance costs and force changes to routing, warehousing and carrier selection. High-value lanes near industrial corridors and border crossings are most exposed, making security standards, tracking and vetted 3PLs essential.
Aranceles y reconfiguración automotriz
Aranceles de EE. UU. y peticiones de México para reducir tasas a autos no conformes con T‑MEC presionan exportaciones. Cierres/ajustes de plantas y potencial compra por BYD/Geely muestran reconfiguración; sube el escrutinio sobre “backdoor” chino y el riesgo de medidas.
Critical minerals alliance reshaping
Canberra’s A$1.2bn Critical Minerals Strategic Reserve (initially gallium, antimony, rare earths) and deeper US-led cooperation (price floors, offtakes) are accelerating non‑China supply chains, creating investment openings but higher compliance, geopolitical and pricing-policy risk for manufacturers.
Industrial decarbonisation via CCUS
The UK is moving carbon capture from planning to build-out: five major CCUS projects reached financial close, with over 100 projects in development and potential 100+ MtCO₂ storage capacity annually by mid‑2030s. Policy clarity and funding pace will shape investment, costs, and competitiveness for heavy industry.
Fiscalización digital y aduanas
El SAT intensifica auditorías basadas en CFDI y cruces automatizados, priorizando “factureras”, subvaluación y comercio exterior. Se reporta enfoque en aduanas (27,1% de ingresos tributarios) y nuevas facultades/visitas rápidas, elevando riesgos de bloqueo operativo, devoluciones y multas.
Tariff volatility and legal risk
Rapidly changing tariffs—autos, aircraft, semiconductors and broad “reciprocal” measures—are being tested in courts, including Supreme Court scrutiny of emergency-authority tariffs. This creates pricing uncertainty, contract disputes, and prompts inventory front‑loading and supply-chain reconfiguration.
Quality FDI and semiconductors
Registered FDI reached US$38.42bn in 2025 and realised FDI about US$27.62bn (highest 2021–25). Early-2026 approvals topped US$1bn in Bac Ninh and Thai Nguyen, with policy focus on semiconductors, AI, and higher value-added supply chains.
Shadow fleet shipping disruption
Iran’s sanctioned “shadow fleet” faces escalating interdictions and designations, with vessels and intermediaries increasingly targeted. Seizures and ship-to-ship transfer scrutiny raise freight, insurance, and demurrage costs, delaying deliveries and complicating due diligence for traders, terminals, and banks.
USMCA review and tariff risk
Preparations for the USMCA/CUSMA joint review are colliding with renewed U.S. tariff threats on autos, steel, aluminum and other goods, raising compliance and pricing risk for integrated North American supply chains and cross-border investment planning.
PPE 2035: nucléaire relancé
La France adopte la PPE3 par décret: six EPR2 confirmés (première mise en service vers 2038) et option de huit supplémentaires, avec objectifs ENR revus à la baisse. Impacts: coûts électriques, contrats long terme, besoins réseau et localisation industrielle.
Critical minerals weaponization risk
China’s dominance in rare-earth processing (often cited near 90%) and other critical inputs sustains leverage via export licensing and controls. Western countermeasures—stockpiles, price floors, and minerals blocs—raise structural fragmentation risk, driving dual sourcing, inventory buffers, and higher input costs.
Improving external buffers and ratings
Fitch revised Turkey’s outlook to positive, citing gross FX reserves near $205bn and net reserves (ex-swaps) about $78bn, reducing balance-of-payments risk. Better buffers can stabilize trade finance and counterparty risk, though inflation and politics still weigh on sentiment.
US fiscal dysfunction and shutdown risk
Recurring shutdown threats and funding brinkmanship can disrupt federal procurement, permitting, and regulatory processing. While some enforcement bodies continue operating, uncertainty affects travel, customs coordination, infrastructure programs, and contractor cashflow—raising operational contingencies for firms dependent on federal interfaces.