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Mission Grey Daily Brief - September 12, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains dynamic, with ongoing geopolitical tensions and economic developments shaping the landscape. The US and its allies have imposed sanctions on Iran for supplying ballistic missiles to Russia, which Moscow is likely to use in Ukraine. Venezuela's political crisis deepens as opposition leader Edmundo González Urrutia seeks asylum in Spain. Tensions flare between Ethiopia and Somalia over Ethiopian troops' seizure of airports in Somalia's Gedo region. Algeria's official media launches a campaign against France due to criticism of Algerian election coverage and France's stance on Western Sahara. Iraq faces an $18 billion railway corruption scandal, stirring public outrage ahead of the 2025 parliamentary elections.

Iran-Russia Missile Transfer and Sanctions

US Secretary of State Antony Blinken confirmed that Iran has supplied Russia with short-range ballistic missiles, marking a "threat to all of Europe." This development has prompted the US and its European allies, including France, Germany, and the UK, to impose sanctions on Iran, targeting individuals, entities, and air transport. The sanctions aim to disrupt Iran's ballistic missile program and weapons transfers to Russia. The US Treasury Department has designated individuals and entities in Iran and Russia for sanctions, freezing assets and barring transactions with US persons. The German Foreign Ministry and a joint statement by Germany, France, and the UK have condemned the transfers as a direct threat to European security. The UK has also added designations under its Iran and Russia sanctions regimes.

Venezuela's Political Crisis and Opposition Leader's Exile

Venezuela's political crisis continues to unfold as opposition leader Edmundo González Urrutia, who claimed victory in the July 2024 elections, has fled to Spain, where he has been granted political asylum. González Urrutia feared for his safety due to persecution by the Venezuelan prosecutor's office and the country's security forces. This development highlights the ongoing instability in Venezuela, with widespread human rights abuses committed by the Maduro regime against peaceful protesters, opposition leaders, and critics. Venezuela's vice president announced González Urrutia's departure, emphasizing the need for "peace and political tranquillity."

Ethiopia-Somalia Tensions over Airport Seizure

Ethiopian troops have seized key airports in Somalia's Gedo region, including Luq, Dolow, and Bardere, to prevent the airlift of Egyptian troops intended to replace Ethiopian forces in the region. This intervention worsens relations between Ethiopia and Somalia, already strained by Ethiopia's memorandum of understanding with Somaliland and Somalia's defense agreement with Egypt. The Somali government has warned that Ethiopian troops must leave the country by next year, but the entrenched presence of Ethiopian forces in various regions complicates the situation. The ongoing dispute between Ethiopia and Egypt over the Grand Ethiopian Renaissance Dam further exacerbates tensions.

Algeria-France Media Campaign

Algeria's official media has launched a campaign against France, triggered by French criticism of the recent Algerian election coverage and France's shift in position on the Western Sahara issue. Algeria's press agency, APS, accused the French media of engaging in "hostile practices" and portraying a negative image of Algeria. The Algerian media also criticized the French government of Emmanuel Macron, highlighting Algeria's economic stability and debt-free status in contrast to France's economic challenges. This media campaign reflects Algeria's displeasure with France's stance on the Western Sahara and the perceived bias in election coverage, underscoring the diplomatic tensions between the two countries.

Risks and Opportunities

  • Risk: The Iran-Russia missile transfer and subsequent sanctions on Iran heighten geopolitical tensions and increase the risk of direct confrontation between Russia and European countries. Businesses operating in the region should prepare for potential disruptions and supply chain challenges.
  • Risk: The Venezuela political crisis and ongoing human rights abuses pose significant risks to businesses, particularly those in the energy, mining, and infrastructure sectors. Companies should monitor the situation and consider contingency plans to protect their assets and personnel.
  • Opportunity: Ethiopia's intervention in Somalia highlights the country's strategic interests in the region. Businesses in the defense, security, and infrastructure sectors may find opportunities in Ethiopia's efforts to secure its influence and maintain its military presence in neighboring countries.
  • Risk: The media campaign between Algeria and France indicates ongoing diplomatic tensions and a potential deterioration of relations. Businesses with operations or investments in either country should monitor the situation and be prepared for potential political and economic fallout.

Recommendations for Businesses and Investors

  • Given the dynamic and complex global landscape, businesses and investors should closely monitor the situations in Iran, Venezuela, Ethiopia, Somalia, Algeria, and their respective regions.
  • Companies with exposure to the aforementioned countries should conduct thorough risk assessments and develop contingency plans to mitigate potential disruptions.
  • Diversifying supply chains and seeking alternative sources of raw materials and components can help reduce reliance on a single region or country.
  • Businesses should prioritize the safety and security of their personnel and assets, especially in high-risk areas.
  • Stay apprised of changing sanctions regimes and comply with all relevant international regulations to avoid legal and reputational risks.

Further Reading:

$18bn railway corruption scandal rattles Iraq's political scene - The New Arab

'A threat to all of Europe': Iran is supplying Russia with ballistic missiles, says US secretary of state - Sky News

Algerian press lashes out at France for its criticism of Tebboune's re-election - Atalayar EN

Americas: Limited Protection for People Fleeing Venezuela, Haiti - Human Rights Watch

Belarusian Historian Ihar Melnikau Goes On Trial On Extremism Charge - Radio Free Europe / Radio Liberty

Blinken says Russia has received new ballistic missiles from Iran - The Guardian

Blinken: Iran sending ballistic missiles to Russia - POLITICO Europe

Edmundo Gonzalez’s exile to Spain marks the latest blow to the opposition - Modern Diplomacy

Ethiopia-Somalia: Ethiopian troops seize airports in Gedo region to prevent Egyptian weapons delivery - Agenzia Nova

France, Germany and UK condemn export of Iranian ballistic missiles to Russia – as it happened - The Guardian

Germany, France, U.K. slap sanctions on Iran over missiles for Russia - The Hindu

Jailed Belarusian Activist Charged With Disobeying Prison Guards - Radio Free Europe / Radio Liberty

Themes around the World:

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Taiwan's Semiconductor Geopolitical Risk

Taiwan, home to TSMC producing over 90% of advanced semiconductors, faces acute geopolitical risks from potential Chinese aggression. Disruptions could severely impact global AI and tech industries, causing supply chain shocks, increased costs, and valuation rerating. Investors must now factor in structural geopolitical risks beyond traditional earnings forecasts, reshaping global tech and investment landscapes.

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Shifts in Global Economic Order and Investment Strategies

The global economic landscape is fragmenting with rising trade barriers and geopolitical risks. Investors are pivoting towards regional diversification, resilient sectors, and alternative assets to mitigate disruptions from tariffs, technology restrictions, and supply chain vulnerabilities, reshaping international investment approaches.

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US-Japan Strategic Partnership Expansion

The renewed US-Japan alliance under Prime Minister Takaichi and former President Trump focuses on defense spending, technology collaboration, and critical minerals supply chains. This partnership drives significant Japanese investment in US manufacturing and energy sectors, fostering industrial growth, supply chain resilience, and enhanced geopolitical alignment, attracting investor interest globally.

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Labor Market Weakness and Monetary Policy Implications

Rising unemployment and a cooling labor market are increasing pressure on the Bank of England to consider interest rate cuts. This shift in monetary policy expectations affects bond yields, investor sentiment, and borrowing costs, with broad implications for business financing, consumer spending, and economic growth trajectories.

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Economic Impact of Protests and Lockdowns

Post-election protests and lockdowns, particularly in Douala, have led to daily economic losses estimated at €15 million, with business closures and disrupted transport services. Such disruptions affect liquidity, payment flows, and supply chain continuity essential for cross-border commerce and investment.

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Consumer Market Resilience and Growth

Vietnam's consumer spending is projected to grow 7.2% in 2026, supported by rising incomes, stable inflation, and a tight labor market. Tourism expansion further bolsters domestic demand. However, currency depreciation risks imported inflation, potentially pressuring prices and purchasing power. Despite global headwinds, robust domestic consumption remains a key pillar of Vietnam's economic resilience and growth outlook.

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Geopolitical Multipolarity Impact

Australia is navigating a new multipolar world where no single power dominates, increasing geopolitical volatility. This shift compels Australia to leverage its resource wealth and institutional stability to attract global capital, diversify supply chains, and maintain pragmatic relations with multiple powers, enhancing its strategic economic position amid global uncertainty.

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Growth Cycle Bottoming Out with Positive Outlook

India's domestic growth cycle shows signs of bottoming out, supported by low interest rates, easing crude prices, and a normal monsoon. Government infrastructure investments, private capex recovery, and renewable energy expansion underpin a medium-term uptrend, although global trade uncertainties and geopolitical risks remain headwinds for sustained growth acceleration.

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Credit Rating Upgrades and Market Optimism

Recent upgrades by S&P Global and positive outlooks from Moody’s and Fitch reflect improved fiscal management and political stability. This has fueled a surge in equity and bond markets, attracting foreign investment and lowering borrowing costs. However, sustained reforms and execution are critical to maintaining momentum and achieving investment-grade status.

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Vision 2030 Social and Labor Reforms

Vision 2030 has driven significant social reforms, notably increasing female labor participation to over 36% and reducing unemployment to 3.2%. These changes enhance human capital utilization, supporting economic diversification and inclusive growth. However, female participation growth has plateaued, indicating ongoing challenges in labor market integration and gender equality.

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Strengthening U.S.-Saudi Trade and Investment Ties

Trade and investment relations with the U.S. are evolving, with Saudi Arabia shifting exports towards Asia but maintaining significant financial investments in U.S. equities. The Public Investment Fund's strategic acquisitions, including a $55 billion buyout of EA Sports, highlight deepening economic collaboration focused on technology, entertainment, and defense sectors.

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Ruble Currency Vulnerability and Economic Weakness

The Russian ruble remains decoupled from fundamentals due to sanctions but faces long-term depreciation pressures from falling export revenues and domestic financial stress. Economic indicators show cooling manufacturing and flat GDP growth, creating challenges for monetary policy and increasing currency volatility, impacting foreign exchange risk for investors.

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Infrastructure Investment Challenges

Australia leads globally in attracting infrastructure capital, particularly in renewables, data centers, and transmission networks. However, investor concerns about regulatory delays, environmental approvals, and high labor costs impede project execution. The government’s efforts to reform environmental legislation aim to balance ecological protection with faster approvals, critical for sustaining momentum in energy transition and economic development.

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Energy Security and International Aid

Ukraine is securing funding and technical assistance from Norway, the EU, and G7 to stabilize energy supplies after Russian attacks on infrastructure. Ensuring heating and electricity stability is critical for economic resilience and business continuity, especially during winter, influencing investor risk assessments and operational planning.

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US Domestic Challenges: Cybersecurity and Government Shutdown

The US faces significant domestic challenges impacting business operations and investor confidence. A cybersecurity breach at the Congressional Budget Office, suspected to be by a foreign actor, raises security concerns. Concurrently, an extended government shutdown disrupts federal operations, delays economic reporting, and threatens airline flight reductions, exacerbating uncertainty and operational risks across sectors.

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Domestic Growth Cycle and Investment Outlook

India's domestic growth cycle shows signs of bottoming out with supportive factors such as low interest rates, easing crude oil prices, and a normal monsoon. Government investments in infrastructure, manufacturing, and renewable energy, coupled with private sector capex recovery and Production Linked Incentive (PLI) scheme expansion, underpin a medium-term uptrend in investment, fostering sustained economic momentum despite global trade uncertainties.

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Geopolitical Risks Affecting Energy Infrastructure

Ukrainian drone attacks on key Russian oil ports like Novorossiysk and refineries have heightened geopolitical risks, disrupting oil exports temporarily. These attacks aim to reduce Russia's energy revenues, injecting volatility into global oil markets and complicating supply chain reliability for energy-dependent industries worldwide.

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Fiscal Pressures and Social Policy Shifts

Facing a record budget deficit exceeding $70 billion in 2025, the Kremlin plans tax hikes and social benefit cuts, shifting fiscal burdens onto households and regional authorities. Measures include increased VAT, reduced welfare programs, and potential taxation of informal workers, signaling a redefined social contract amid economic strain and declining living standards, which may fuel social discontent.

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Robust Export Growth Amid Challenges

Vietnam's exports surged over 16% year-on-year to $368 billion by October 2025, driven by electronics and mining sectors. Despite global trade barriers and US tariff hikes, exports remain resilient, with a projected $900 billion turnover in 2025. However, rising protectionism, geopolitical tensions, and sustainability requirements pose risks, urging diversification and leveraging 17 FTAs for sustainable growth.

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Deepening Economic Recession

Germany faces a deepening recession with widespread economic stagnation across sectors. Over one-third of companies plan job cuts in 2026, especially in industry, with investment intentions declining. This downturn threatens industrial competitiveness, tax revenues, and triggers social imbalances, complicating international trade and investment strategies amid weak domestic demand and global uncertainties.

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Thailand-Cambodia Border Conflict Risks

Renewed clashes along the Thailand-Cambodia border threaten exports, tourism, and labor markets. With significant trade and up to 500,000 Cambodian workers affected, prolonged tensions could erase 1% of Thai exports and disrupt agricultural labor supply, impacting regional supply chains and investor confidence in border provinces and cross-border commerce.

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US-Mexico Diplomatic Tensions

Diplomatic frictions, including US sanctions on Mexican banks and concerns over potential US intervention against cartels, strain bilateral relations. These tensions affect financial institutions, cross-border trade, and investor perceptions, complicating Mexico's economic integration with the US and potentially disrupting supply chains and capital flows.

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Investment Confidence and Economic Growth

Post-ART, Malaysia has seen a 13.2% year-on-year increase in approved investments, with foreign investments comprising over half. The agreement enhances trade predictability, strengthens the investment ecosystem, and contributes to robust GDP growth, positioning Malaysia favorably within global trade frameworks amid rising protectionism.

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Structural Economic Challenges

Germany faces significant structural economic issues including stagnating growth, declining private investment, and rising state spending. These factors contribute to a deepening recession, threatening long-term competitiveness and social welfare sustainability. Without comprehensive reforms, Germany risks prolonged economic stagnation impacting international trade and investment confidence.

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Consumer Market Strength and Domestic Demand

Vietnam's consumer spending is projected to grow 7.2% in 2026, supported by stable inflation, tight labor markets, and rising real wages. Retail sales and tourism recovery bolster domestic demand, offsetting external trade headwinds. However, currency depreciation risks imported inflation, potentially pressuring monetary policy and household purchasing power, necessitating careful macroeconomic management to sustain consumption growth.

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Critical Minerals and Downstream Industrialization

Indonesia holds 42% of global nickel reserves and is advancing downstream industrialization by banning raw ore exports and developing smelters and battery manufacturing ecosystems. This strategic move positions Indonesia as a key player in clean energy supply chains, attracting over US$30 billion in foreign direct investment and reshaping global trade dynamics.

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Geopolitical Tensions Impacting Energy Markets

Heightened geopolitical tensions involving Iran, including tanker seizures near the Strait of Hormuz and military confrontations, inject volatility into global oil markets. Iran's strategic position at a vital energy chokepoint amplifies risks of supply disruptions, potentially triggering sharp oil price spikes and destabilizing global energy supply chains, affecting international trade and investment.

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Cybersecurity and Internet Infrastructure Risks

Denmark experienced significant disruptions due to a global internet outage linked to Microsoft Azure's DNS issues, affecting critical sectors including transportation, finance, and government services. This highlights Denmark's vulnerability to concentrated cloud service providers, posing risks to business continuity, supply chains, and digital operations reliant on global tech giants.

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Stock Market Rally and Volatility Risks

The KOSPI index has surged over 70% in 2025, driven by tech and AI optimism, but rising margin loans and retail investor leverage heighten volatility risks. The VKOSPI volatility index spiked to 44, signaling market sensitivity. Regulatory concerns focus on speculative borrowing and potential for a policy-driven bubble, posing risks to financial stability and investor confidence.

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Sovereignty and Policy Autonomy Assurance

Malaysia's government and MITI emphasize that the ART fully protects national sovereignty and policy autonomy. No amendments to Malaysian laws were required, and key red lines such as Bumiputera policies and strategic sectors remain intact. This assurance mitigates political risks and reassures investors about Malaysia's control over its economic and trade policies.

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Minimum Wage Increase and Labor Market Impacts

The anticipated 4% rise in the National Living Wage to £12.70 may compress salary differentials, particularly affecting graduate starting salaries and employment in sectors like hospitality. This wage hike could reshape labor market dynamics, influence consumer spending, and challenge traditional assumptions about education and career progression.

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Foreign Investor Capital Fluctuations

Despite recent foreign investor withdrawals totaling Rp3.79 trillion in November 2025, domestic trading activity surged with record transaction volumes and values. Net foreign sales year-to-date remain significant, yet increased domestic investor engagement mitigates volatility. This dynamic highlights Indonesia's evolving capital market structure and the importance of domestic investor base stability amid global capital flow shifts.

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Thailand-Cambodia Border Conflict Impact

Renewed clashes at the Thailand-Cambodia border threaten significant economic damage, potentially erasing 130 billion baht in exports and disrupting labor supply with up to 500,000 Cambodian workers affected. Tourism and border trade face downturns, though trade negotiations with the US remain unaffected, underscoring geopolitical risks to regional supply chains and cross-border commerce.

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Taiwan's Semiconductor and AI Boom

Taiwan's economy is experiencing unprecedented growth driven by surging global demand for AI-related semiconductor chips, primarily produced by TSMC. This boom is propelling GDP growth toward 6%, reinforcing Taiwan's strategic importance in global tech supply chains. However, rising energy demands and currency volatility pose operational challenges for sustaining this momentum.

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Market Resilience Amid Global Uncertainty

Despite global economic headwinds and geopolitical tensions, South Africa's financial markets have demonstrated resilience, with strong equity performance and increased foreign bond inflows. This reflects improved macroeconomic fundamentals, investor confidence in reform momentum, and the country's strategic positioning within sub-Saharan Africa's growth narrative.

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Foreign Investor Capital Outflows

Foreign investors have withdrawn significant capital from Indonesian financial markets in 2025, with net sales in equities, government bonds, and Bank Indonesia securities totaling trillions of rupiah. This trend reflects cautious investor sentiment amid fiscal concerns and global uncertainties, potentially impacting liquidity, market stability, and foreign investment inflows in Indonesia.