Mission Grey Daily Brief - October 23, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains highly volatile, with geopolitical tensions and conflicts continuing to impact the global economy. The tight US presidential race between Republican Donald Trump and Democratic Kamala Harris is causing concern among investors, with a Trump victory expected to heighten geopolitical tensions and negatively impact the global economy. Meanwhile, the BRICS summit hosted by Russia is aimed at building a non-Western global coalition, tightening economic and military ties with China and snubbing Western leaders. The ongoing conflict in Ukraine and the escalating attacks on Ukrainian ports are threatening global food security and impacting agricultural exports. Additionally, reports of North Korea sending troops to aid Russia in the Ukraine war have raised global concerns, with South Korea warning of potential arms shipments to Ukraine.
US Presidential Election and Global Economy
The tight US presidential race between Republican Donald Trump and Democratic Kamala Harris is causing concern among investors, with a Trump victory expected to heighten geopolitical tensions and negatively impact the global economy. Trond Grande, deputy CEO of Norges Bank Investment Management, which operates the $1.8 trillion fund, stated that a Trump victory would exacerbate geopolitical tensions and hurt European companies dealing with Chinese companies. The fund is monitoring the escalating conflict in the Middle East and its potential impact on its holdings in the region.
BRICS Summit and Russia-China Alliance
The BRICS summit hosted by Russia is aimed at building a non-Western global coalition, tightening economic and military ties with China and snubbing Western leaders. Russian President Vladimir Putin defended his invasion of Ukraine and expressed his intention to keep fighting until victory. The BRICS alliance, originally comprised of Brazil, Russia, India, and China, now includes countries that make up 45% of the world's population. Chinese President Xi Jinping expressed his support for the summit and highlighted the alliance's economic and military ties. The US and its Western allies have pressured China to join in condemning Russia's invasion, but China has resisted these efforts.
Ukraine Conflict and Global Food Security
The ongoing conflict in Ukraine and the escalating attacks on Ukrainian ports are threatening global food security and impacting agricultural exports. British Prime Minister Sir Keir Starmer warned that Russia's attacks on Ukrainian ports are delaying the export of agricultural produce, including aid intended for Palestinians caught up in the conflict with Israel. Russian missile strikes have damaged grain silos and port infrastructure, impacting the export of agricultural goods. However, Ukraine has created a maritime corridor to ensure the safety of grain exports, and exported 962,000 tonnes of grain in the first ten days of October. The UK government has announced an extra £2.26 billion in funding for Ukraine, using profits from Russian assets held in Europe.
North Korea's Potential Involvement in Ukraine War
Reports of North Korea sending troops to aid Russia in the Ukraine war have raised global concerns, with South Korea warning of potential arms shipments to Ukraine. South Korean intelligence suggests that Russian ships have transported around 1,500 North Korean troops, who are expected to be deployed to the frontline in Ukraine after training. South Korean media has reported that Pyongyang is readying up to 12,000 troops. The deployment of North Korean troops would mark a major shift in North Korea's foreign relations and pose a significant global risk. Experts on North Korea have expressed concern about the potential use of North Korean troops as cannon fodder and the logistical and cross-cultural challenges of integrating them into Russian forces.
Further Reading:
Albania’s left-wing former President Meta is arrested on corruption allegations - Toronto Star
Belarus arrests well-known analyst as crackdown on opposition continues - The Messenger
Is Russia behind recent arson attacks in Europe? - Euronews
Paul Whelan says he passed information from Ukraine frontlines to US from Russian prison - USA TODAY
Putin tries to build non-Western global coalition at BRICS summit as Ukraine war looms - USA TODAY
Sri Lanka police raise security at popular surf site over threat to Israelis - Voice Of Alexandria
Starmer warns Russia attacks in Ukraine risk global food security - BBC.com
Trump victory would heighten geopolitical tensions, Norway fund official says - KFGO
Themes around the World:
Renewables, batteries and green hydrogen
Large-scale clean-energy buildout is accelerating: the $1.8bn ‘Energy Valley’ project includes 1.7 GW solar plus 4 GWh storage, and a 10 GWh/year battery factory in SCZONE is planned. Green hydrogen/ammonia export plans target first shipment by 2027.
USMCA review and tariff risk
The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.
Dollar weakness and policy risk premium
The U.S. dollar’s slide to multi-year lows, amid tariff uncertainty and governance concerns, increases FX volatility for importers and investors. A weaker dollar can support U.S. exporters but raises U.S.-bound procurement costs and complicates hedging strategies.
Defense budget politics and capability delivery
Parliamentary standoffs over a roughly US$40bn defense plan and proposed cuts create uncertainty around procurement timelines, mobilization readiness, and resilience investments. Heightened political risk can affect ratings, contractor pipelines, and business continuity planning for critical suppliers.
Fiscal Stabilization and Policy Reform
South Africa is nearing a fiscal turning point, with debt-to-GDP stabilizing and primary surpluses returning. Improved fiscal credibility has strengthened the rand and bonds, but sustaining reforms and managing coalition politics remain critical for long-term investor confidence.
EEC land, zoning, logistics bottlenecks
Industrial land scarcity and outdated zoning in the EEC are delaying large projects; clearing public rights-of-way can take 7–8 years. Government efforts to “unlock” constraints and restart U-Tapao Airport City PPP may reshape site selection, capex timing, and logistics planning.
Record EBRD and Foreign Investment Inflows
The EBRD invested a record €2.7 billion in Turkey in 2025, with 91% in the private sector. Major projects include infrastructure and post-earthquake reconstruction, underlining Turkey’s long-term investment appeal and resilience.
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.
Defence exports and geopolitical positioning
Turkey’s defence industry is expanding exports and co-production, exemplified by a reported $350m arms agreement with Egypt and large-scale drone manufacturing capacity growth. This supports industrial upgrading and regional influence, but can elevate sanctions, licensing and reputational due-diligence requirements.
Energy Transition: Nuclear and Renewables
South Korea is advancing its energy transition by planning two new nuclear reactors by 2038 and emphasizing renewables to meet carbon neutrality goals. This shift will influence industrial energy costs, supply chain sustainability, and investment in green technology sectors.
Tariff-Driven Supply Chain Reconfiguration
US tariffs have forced businesses to diversify supply chains, reduce inventory holdings, and reconfigure logistics networks. The shift from legacy mega-hubs to intermediate nodes and diversified ports is improving efficiency but increasing operational complexity and costs.
Sanctions enforcement intensifies at sea
UK and allies are escalating action against Russia’s ‘shadow fleet’, including interdictions, proposed boarding powers and broader maritime-services bans. Shipping, insurers, traders and banks face higher compliance burdens, detention risk, route disruption and potentially higher freight and war-risk premiums.
India trade deals intensify competition
India’s new EU deal and evolving US tariff arrangements reduce Pakistan’s historical preference cushion, especially in textiles and made-ups. European and US buyers may renegotiate prices and lead times, pressuring margins and accelerating shifts toward higher value-add, reliability, and compliance performance.
Concentration Risk in Semiconductors
Over 97% of high-end chips are still produced in Taiwan. US officials warn that any blockade or destruction of this capacity could trigger a global economic crisis, highlighting the urgent need for diversification and supply chain resilience.
Transactional deal-making with allies
Washington is increasingly using tariff threats to extract investment and market-access commitments from partners, affecting sectors like autos, pharma, and lumber. Businesses should anticipate rapid policy shifts tied to negotiations, with material implications for location decisions, sourcing, and pricing in key allied markets.
Macroeconomic Reform and Privatization Drive
Egypt is accelerating economic reforms, including privatization and reducing state economic involvement, to attract foreign investment. The government aims for over 70% private sector investment by 2030, supported by IMF-backed policies, improved credit ratings, and targeted sector incentives.
Monetary policy volatility persists
Bank Rate held at 3.75% after a narrow 5–4 vote, with inflation around 3.4% and cuts debated for March–April. Shifting rate expectations affect sterling, refinancing costs, property and M&A valuations, and working-capital planning for importers and exporters.
Tokenised gilts and DSS scaling
UK is piloting tokenised government bonds (DIGIT) using HSBC’s blockchain within the Digital Securities Sandbox, advancing on-chain settlement. This could reshape post-trade workflows, collateral mobility, and vendor selection for brokerages and investment platforms serving global clients.
Semiconductor Supply Chain Resilience
Japan is accelerating investment in domestic and allied semiconductor capacity, with TSMC's Kumamoto expansion and TOPPAN's new lines. The sector is driven by AI demand, strategic 'de-China' moves, and advanced process upgrades, reshaping global supply chains and investment flows.
Semiconductor Sector Faces US Pressure
The US is leveraging tariffs and investment incentives to push Korean semiconductor giants like Samsung and SK hynix to expand US-based production. This industrial policy shift could reshape global supply chains, affect Korea’s tech leadership, and increase operational costs for Korean firms.
US Tariff Escalation and Trade Wars
Recent US tariff threats against China, the EU, and South Korea have intensified global trade tensions, disrupting supply chains and raising costs. Tariffs averaging 18%—the highest since 1934—are largely borne by US consumers and businesses, impacting inflation and investment strategies.
Rare earths processing and project pipeline
Government promotion of 49 mines and 29 processing projects, plus discoveries in gallium/scandium and magnet rare earths, supports Australia’s shift from raw exports to midstream processing. Opportunities are significant, but permitting, capex, and processing technology risk remain decisive.
Expanded Sanctions and Secondary Measures
Congress and the administration are widening sanctions tools, including efforts to target Russia’s ‘shadow fleet’ and a proposed 25% tariff penalty on countries trading with Iran. This raises counterparty, shipping, and insurance risk and increases compliance costs across global trade corridors.
Sticky Inflation and Consumer Impact
Despite cooling headline inflation, tariffs and supply disruptions keep US inflation above the Fed’s 2% target. Households face an average tariff burden of $1,800–$2,100 annually, disproportionately affecting lower-income groups and dampening consumer sentiment, with implications for retail and investment.
Critical Minerals Supply Chain Realignment
Australia is advancing a critical minerals strategy, including a $1.2 billion strategic reserve and international partnerships, to reduce dependence on China. This shift is reshaping global supply chains for rare earths, gallium, and antimony, with significant implications for technology and defense sectors.
Foreign investment approvals and regulation drag
Multinational CEOs report slower, costlier approvals and heavier compliance. OECD ranks Australia highly restrictive for foreign investment screening; nearly half of applications exceeded statutory timelines, and fees have risen sharply. Deal certainty, transaction costs and time-to-market are increasingly material planning factors.
Foreign Investment Scrutiny and Security
US authorities have tightened restrictions on foreign, especially Chinese, investment in strategic sectors and real estate near sensitive sites. Expanded CFIUS powers and state-level laws increase compliance burdens and impact cross-border M&A and supply chain localization.
Energy Geopolitics and Trade Deals
U.S. trade negotiations increasingly bundle energy commitments and geopolitical conditions, as seen in tariff relief tied to partners’ changes in Russian oil purchases. This links market access to energy sourcing, complicating procurement strategies and increasing political risk in long-term offtake contracts.
Macro volatility: rates, inflation, peso
Banxico paused its easing cycle, holding the policy rate at 7% amid higher inflation forecasts and trade-tension risks. Higher financing costs and exchange-rate swings affect working capital, hedging and pricing, particularly for import-dependent industries and USD-linked contracts.
Escalating tariffs and legal risk
Wide-ranging import tariffs—especially on China—are lifting input costs and retail prices, while Supreme Court review of IEEPA authorities adds reversal risk. Companies should stress-test pricing, customs bonds, and contract clauses for sudden duty changes.
Persistent Foreign Exchange Pressures Remain
Egypt continues to face significant foreign exchange challenges, with external debt rising to $161.2 billion and a debt-to-GDP ratio of 44.2%. These pressures impact import costs, repatriation of profits, and overall business confidence, affecting international investment strategies.
Chronic Debt Dependency Crisis
Pakistan’s reliance on foreign loans from China, Saudi Arabia, UAE, and the IMF has reached critical levels, with external debt exceeding $128 billion. This dependency forces policy compromises and exposes businesses to currency volatility, regulatory unpredictability, and lender-driven reforms.
Shadow Economy and Sanctions Evasion
Iran’s reliance on shadow fleets, barter trade, and crypto channels to bypass sanctions has grown. US Treasury actions against crypto exchanges and shipping networks highlight enforcement risks for counterparties and the need for enhanced due diligence in all Iran-linked transactions.
USMCA, nearshoring, and critical minerals
Nearshoring to Mexico/Canada is accelerating, reinforced by U.S. critical-mineral initiatives and stricter origin enforcement. This benefits firms that regionalize supply chains, but raises audit burdens for rules-of-origin, labor content, and ESG traceability—especially in autos and batteries.
Critical Minerals And Semiconductor Supply Chains
Vietnam is deepening partnerships with the EU and other global actors to develop its rare earths, tungsten, and semiconductor sectors. These efforts aim to diversify supply chains, reduce dependence on China, and position Vietnam as a key node in global technology manufacturing.
Investment Climate and SME Funding Gap
Renewed investor confidence is evident, with FDI pipelines growing, especially in renewables and tech. However, a R350 billion SME funding gap persists, as stricter governance and financial controls limit access to capital for smaller, informal businesses.