Mission Grey Daily Brief - October 25, 2024
Summary of the Global Situation for Businesses and Investors
The world is witnessing a troubling rise in business bankruptcies, with Slovenia and Germany projected to experience significant increases. This trend reflects broader economic challenges affecting companies globally, including geopolitical tensions and a slow recovery from the pandemic. Meanwhile, Georgia is going to the polls in a critical election that could determine whether the country veers towards a more authoritarian, Russia-aligned path. The deployment of North Korean troops to Russia has raised concerns about a potential escalation of the conflict in Ukraine. Additionally, Israel and Iran-backed groups are engaged in a deadly conflict in the Gaza Strip and Lebanon, with rising civilian casualties and a growing humanitarian crisis.
Georgia's Election: A Tussle Between Russia and the West
On Saturday, Georgians will vote in a critical election that could determine the country's future trajectory. For the past three decades, Georgia has maintained strong pro-western aspirations, with polls showing up to 80% of its residents favour joining the EU. However, the government, led by the populist Georgian Dream (GD) party, has increasingly shifted away from the west in favour of Russia, showing reluctance to condemn Moscow for its invasion of Ukraine. The parliamentary elections are seen by many as the most important since independence from the Soviet Union in 1991, with the country's democratic future hanging in the balance.
North Korea's Involvement in the Ukraine War
North Korea has sent troops to Russia, raising concerns about a potential escalation of the conflict in Ukraine. The US has seen evidence of this deployment, and Belarusian leader Alexander Lukashenko has warned Russia against sending North Korean troops to war, stating that it would lead to escalation and the deployment of NATO troops to Ukraine. South Korea has threatened to arm Ukraine in response to North Korea's support for Russia, condemning the deployment of North Korean troops. Analysts say South Korean weapons could make a significant difference for Ukraine, but South Korea remains wary of getting involved due to its long-standing ban on sending military assistance to foreign countries at war.
Israel-Iran Conflict in Gaza and Lebanon
The Israel-Iran conflict in Gaza and Lebanon has resulted in rising civilian casualties and a growing humanitarian crisis. Israel has launched a withering offensive, with almost 43,000 people killed and virtually all of Gaza's 2.3 million people displaced. Israel has been under pressure from many allies, including the United States, for the rising number of civilian casualties and accusations of hindering aid supplies. Iran-backed Hezbollah has escalated its attacks on Israel, using "precision missiles" and new types of drones. The US has designated Hezbollah a terrorist organization, and Hezbollah's political party has seats in the Lebanese parliament.
Turkey's Airstrikes in Syria and Iraq
Turkish forces have launched airstrikes on suspected Kurdish militant targets in Syria and Iraq after an attack on a state aerospace company in Ankara killed five people. The strikes targeted sites linked to the Kurdistan Workers' Party (PKK), which is recognised as a terrorist group by the US, EU, and others. The Ankara attack came at a fragile moment in the decades-long conflict between Turkey and the PKK, coinciding with renewed discussions about a possible ceasefire. The deal would involve offering Abdullah Ocalan, the PKK's imprisoned leader, a chance to reduce his life sentence in exchange for dismantling the PKK's military wing. However, past peace efforts have collapsed and led to a surge in violence, with strong opposition to any agreement from factions on both sides.
Further Reading:
Harris Calls Trump a Fascist, and North Korea Has Sent Troops to Russia - The New York Times
If South Korea decides to get involved in Ukraine, it has powerful options - Business Insider
Turkey strikes northern Iraq and Syria after attack kills 5 near Ankara - The Independent
Turkish raids kill dozens in Syria and Iraq after Ankara attack - Financial Times
Watershed moment as Georgia goes to polls in tussle between Russia and west - The Guardian
Themes around the World:
Energy tariffs and circular debt
Power-sector reforms, including proposed tariff revisions and circular-debt containment, remain central to macro stabilization. Tariff resets can lift inflation but may reduce industrial cross-subsidies. For investors, the key risks are energy cost predictability, outages, and contract enforcement.
US–Taiwan tariff pact reset
The newly signed US–Taiwan reciprocal trade deal lowers US tariffs on Taiwan to 15% and has Taiwan remove or reduce 99% of tariff barriers on US goods. It reshapes sourcing, pricing, compliance, and market-entry strategies across electronics, machinery, autos, and agriculture.
Balochistan militancy and corridor security
Repeated attacks in Balochistan target transport links and state assets, raising security costs for CPEC, mining and logistics around Gwadar. Heightened risk threatens project timelines, insurance premiums and staff safety, complicating due diligence for greenfield investment.
South China Sea security spillovers
South China Sea tensions remain a structural tail risk as ASEAN and China push for a Code of Conduct by 2026 amid recurring incidents. Businesses should plan for insurance premium spikes, routing adjustments, and contingency sourcing if maritime frictions intensify.
Taiwan tensions and operational contingency
Taiwan remains a core flashpoint in U.S.–China relations, elevating tail risks for shipping, semiconductors and insurance. Recent leader-level discussions paired trade asks with warnings on arms sales. Companies should stress‑test logistics, inventory buffers, and contractual force‑majeure exposure for escalation scenarios.
Sanctions compliance incentives harden
OFSI now states penalties can be reduced up to 30% for self-reporting and cooperation. For online investing firms with cross-border clients, stronger screening, escalation and audit trails become strategic necessities as UK sanctions enforcement intensity rises.
Immigration politics and labor supply
Foreign labor is now a core election issue. Japan plans to accept up to 1.23 million workers through FY2028 via revised visas while tightening residence management and enforcement. For employers, this changes hiring pipelines, compliance burdens, and wage/retention competition.
Hydrogen-Roadmap bleibt für Wärme unsicher
Restrukturierungen im Wasserstoffsektor und Debatten über überdimensionierte Infrastruktur deuten auf Verzögerungen beim H2-Hochlauf. Für Wärmeanwendungen (H2-ready Kessel, Spitzenlast, Industrie-Wärme) bleibt die Import- und Preisunsicherheit hoch, was Investitionen in H2-kompatible Assets risikoreicher macht.
High-tech FDI and semiconductor scaling
FDI remains strong with US$38.42bn registered in 2025 and US$27.62bn realised (highest 2021–25). Policy emphasis is shifting toward electronics, semiconductors, AI and rare earths, deepening supplier ecosystems but increasing competition for skilled labour and land.
Financial liquidity chasing commodities
Ample liquidity amid weak real-economy returns is spilling into metals and gold trading, amplifying price volatility. With M2 growth (8.5% y/y) outpacing nominal GDP (3.9%), firms face unpredictable input costs, hedging needs, and potential administrative tightening if bubbles are suspected.
Northern-front escalation tail risk
Recurring Israel–Hezbollah friction and Israeli strikes in Lebanon keep a material escalation scenario alive, especially amid heightened U.S.–Iran tensions. A wider conflict would threaten ports, aviation, energy infrastructure, and business continuity, with knock-on effects to logistics and insurance.
Private capital de-risking infrastructure
Budget 2026 proposes an Infrastructure Risk Guarantee Fund and municipal bond incentives to mobilize private debt/equity for projects. If operationalized, it can improve bankability and speed financial close, influencing PPP pipelines, construction supply chains, and REIT monetization.
Rail concessions expand logistics options
Brazil’s rail concessions policy targets eight auctions and roughly R$140bn in investments, with international technical cooperation (e.g., UK Crossrail) supporting structuring and regulation. Successful tenders would reduce inland freight costs, improve reliability, and open PPP opportunities.
Rising wages and labor tightness
Regular wages rose 3.09% in 2025 to NT$47,884, with electronics overtime at 27.9 hours—highest in 46 years—reflecting AI-driven demand and labor constraints. Cost inflation and capacity bottlenecks may pressure contract terms, automation capex, and talent retention strategies.
DHS shutdown and border frictions
Repeated funding standoffs risk partial DHS shutdowns, creating operational uncertainty for TSA, Coast Guard, and oversight functions even if ICE/CBP enforcement continues. Cross-border logistics and travel may face delays, staffing disruptions, and heightened scrutiny at ports of entry and airports.
Federal shutdown and budget disruption risk
Recurring funding lapses and DHS budget disputes can delay permits, procurement, rulemaking, and infrastructure programs. Contractors and regulated firms should plan for payment delays, staffing disruptions at agencies, and slowed approvals—particularly in security, immigration, and critical-infrastructure oversight.
Ciclo de juros e crédito caro
Com a Selic em 15% e possível início de cortes em março, decisões seguem dependentes de inflação e câmbio. A combinação de juros altos e mercado de trabalho firme afeta financiamento, valuation e demanda, pressionando setores intensivos em capital e importadores.
Rising industrial power cost squeeze
Despite reduced load-shedding, electricity tariffs for large users reportedly rose ~970% since 2007, triggering smelter closures and weaker competitiveness. Expected further annual increases amplify pressure on mining, metals and manufacturing, accelerating self-generation and relocation decisions.
Broader mineral export-ban expansion
Indonesia is considering extending raw-material export bans beyond nickel and bauxite to additional minerals (e.g., tin) to force domestic processing. This raises policy and contract risk for traders while creating opportunities for investors in smelters, refining, and industrial-park infrastructure.
Shipping profitability amid freight slump
Korea’s flagship carrier HMM stayed profitable (13.4% operating margin) despite a 37% SCFI drop and route rate falls near 49% to the U.S. and Europe. Vessel oversupply and Red Sea security remain swing factors for lead times, surcharges, and contract rates.
Nuclear talks uncertainty and snapback
Muscat talks resumed but remain far apart on enrichment and scope, while sanctions continue alongside diplomacy. The risk of negotiation breakdown—or further UN/EU/U.S. “snapback” measures—creates unstable planning horizons for contracts, project finance, and long-cycle investments in Iran-linked trade.
Defense-led industrial upswing
Industrial orders surged 7.8% m/m in Dec 2025 (13% y/y), heavily driven by public procurement and rearmament. Defense spending targets ~€108.2bn and weapons-related orders reportedly exceed pre-2022 averages by 20x. Opportunities rise, compliance burdens increase.
Cyber defense and compliance tightening
Japan is strengthening “active cyberdefense” institutions and pushing tougher security expectations, including in financial and critical infrastructure segments. Multinationals should anticipate higher incident-reporting, supplier security audits, and operational resilience requirements across Japan-based networks.
Sanctions escalation, maritime compliance
UK and partners continue expanding Russia-related sanctions and are considering tougher maritime actions against “shadow fleet” tankers. UK measures target LNG shipping services and designated energy firms, raising due-diligence burdens for traders, insurers, shipping, and commodity supply chains.
Electricity contracts underpin competitiveness
Battery makers and other electro-intensive industries are locking in long-term power contracts with EDF; Verkor signed a 12-year deal alongside its Bourbourg gigafactory. Secured low-carbon electricity is becoming a key determinant of cost, investment viability, and export pricing.
China trade controls and escalation
Washington is preparing fresh Section 301 investigations into Chinese strategic sectors (EV batteries, rare earths, advanced AI chips) alongside existing high China tariff ranges and technology restrictions. Expect renewed compliance burdens, supplier diversification, and heightened disruption risk for electronics, energy transition, and defense-adjacent supply chains.
LNG export expansion and permitting
The administration is accelerating LNG export approvals and permitting, supporting long-term contracts with Europe and Asia and stimulating upstream investment. Cheaper, abundant U.S. gas can lower energy-input costs for U.S. manufacturing while tightening global gas markets and shipping capacity.
Persistent Section 232 sector tariffs
National-security tariffs under Section 232 remain on steel, aluminum, autos, copper, lumber and select furniture products, independent of the IEEPA ruling. These targeted levies reshape sourcing and nearshoring decisions, complicate automotive/metal supply chains, and sustain retaliation risk from partners.
Ports capacity expansion and logistics resilience
DP World’s London Gateway surpassed 3m TEU in 2025 (+52%), with further all‑electric berths and rail investments underway, strengthening UK container capacity. While positive for importers, shifting freight patterns and carrier rate volatility can still disrupt cost forecasting.
Capital markets opening and IPO wave
Tadawul’s broader opening to foreign investors aims to attract institutional inflows, adding depth to local funding options. For corporates, it supports dual listings, debt-equity raises, and M&A pricing—but governance, disclosure, and foreign ownership caps still shape deal structuring.
Border crossings and movement controls
The limited reopening of Rafah for people—under Israeli security clearance and EU supervision—highlights how border-regime shifts can quickly change labor mobility, humanitarian flows and regional political risk. Businesses should expect sudden permitting changes affecting contractors, travel and project timelines.
Skilled-visa uncertainty and delays
H-1B tightening—$100,000 fees, enhanced social-media vetting, and India consular interview backlogs reportedly pushing stamping to 2027—raises operational risk for U.S.-based tech, healthcare and R&D staffing. Companies may shift work offshore or redesign mobility programs.
Semiconductor reshoring and tech geopolitics
Washington continues pressing for more Taiwan chip capacity and supply-chain relocation, while Taipei calls large-scale shifts “impossible.” TSMC’s massive US buildout and parallel overseas fabs heighten capex needs, export-control exposure, and dual-footprint operational complexity for suppliers and customers.
Reconstruction and infrastructure pipeline
Ongoing post-earthquake rebuilding and associated infrastructure upgrades continue to generate procurement and contracting opportunities across construction materials, logistics, and utilities. However, project execution risk remains tied to municipal permitting, cost inflation, and financing conditions under tight policy.
Cross‑strait security and blockade risk
Elevated China–Taiwan tensions and recurring PLA exercises keep contingency risk high for Taiwan Strait shipping, aviation routes, and insurance. Businesses should stress-test just‑in‑time models, diversify logistics corridors, and tighten crisis governance for Taiwan-dependent operations.
Tightening migration and visa rules
Visa restrictions and proposed longer settlement qualifying periods are cutting foreign student and worker inflows; net migration could fall sharply, even negative. Labour-intensive sectors (care, construction, hospitality) face hiring frictions, wage pressure and project delays; universities’ finances are strained.