Mission Grey Daily Brief - November 01, 2024
Summary of the Global Situation for Businesses and Investors
The 2024 US presidential election is gripping the world's attention and could have a significant impact on the global economy. The Russian President Vladimir Putin is taking advantage of a distracted and divided United States to push for pro-Kremlin electoral outcomes in Georgia and Moldova and bring North Korean soldiers to Russia to fight Ukraine. China's military incursions into Taiwan's ADIZ and crossings of the median line in the Taiwan Strait have skyrocketed, creating a dangerous new normal. China has imposed sanctions on the US drone supplier to Ukraine, Skydio, banning Chinese companies from providing critical components to the firm. Attackers set fire to the headquarters of a Bangladesh party that supported the country's ousted leader Sheikh Hasina on Thursday night. US airstrikes targeted multiple sites in Syria, killing up to 35 Islamic State militants. The UN General Assembly has condemned the US economic embargo of Cuba for a 32nd year.
US Presidential Election
The 2024 US presidential election is gripping the world's attention and could have a significant impact on the global economy. The vote, held on 5 November, could also have major consequences on international issues ranging from the climate crisis to the reorientation of global supply chains. The Republican candidate is former President Donald Trump and the Democratic candidate is current Vice President Kamala Harris. In China, where election news is filtered through heavily censored state and social media, the focus has been more on spectacle than substance – with a sense that no matter who wins, the tensions of the US-China relationship will remain. People in China have seen their economic prospects dim as the country has struggled to fully rebound following its stringent pandemic controls amid a wider slowdown and property market crisis, among other challenges. Interest in the candidates and their policies appears muted compared with past US elections.
Russia-Ukraine War
The Russian President Vladimir Putin is taking advantage of a distracted and divided United States to push for pro-Kremlin electoral outcomes in Georgia and Moldova and bring North Korean soldiers to Russia to fight Ukraine. New NATO Secretary General Mark Rutte confirmed this week that North Korean military units have been deployed to Russia’s Kursk region for potential battle with Ukrainian troops, who have seized territory there. Pentagon officials estimate that as many as ten thousand North Korean soldiers have been sent to Russia for military training, among them the country’s elite special forces. Even as Russia escalates militarily against Ukraine, it has deployed disinformation, influence operations, and money in Moldova and Georgia, working to turn back pro-Western majorities in both countries that favour eventual integration into the European Union (EU) and other Western institutions.
China-Taiwan Tensions
China's military incursions into Taiwan's ADIZ and crossings of the median line in the Taiwan Strait have skyrocketed, creating a dangerous new normal. Crossings of the median line have become increasingly common since August 2022, when then-House Speaker Nancy Pelosi controversially visited Taiwan, and China has been steadily erasing it altogether. In a recent drill surrounding Taiwan, 111 Chinese warplanes crossed it, marking a single-day high. A nation's ADIZ extends far beyond its territorial airspace, but the area is closely monitored for national security purposes. When Chinese aircraft enter Taiwan's de facto ADIZ, it dispatches combat air patrol (CAP) aircraft in response. In 2021, the Chinese military flew 972 aircraft into Taiwan's ADIZ, and that number nearly doubled in 2022. 1,703 aircraft were recorded in 2023. And 2024 looks to have a record-breaking number, with over 2,000 aircraft documented as of September. They're also no longer limited to a corner of the ADIZ.
China Sanctions US Drone Supplier to Ukraine
China has imposed sanctions on the US drone supplier to Ukraine, Skydio, banning Chinese companies from providing critical components to the firm. Skydio is currently looking for alternative suppliers because of the sanctions, which have also blocked the supply of batteries from the company's sole supplier. The company has asked the Biden administration for help. US officials are concerned that China could undermine US supply chains and make it harder to supply drones used for intelligence gathering in Ukraine. Skydio's crisis highlights the risks faced by US companies dependent on China and comes as foreign businesses worry about China's use of security laws to detain local workers and conduct corporate raids. On 11 October, China imposed sanctions on several US companies, including Skydio which is a private company, in response to Washington's approval of the sale of combat drones to Taiwan. Skydio was recently awarded a contract with Taiwan’s National Fire Agency. The sanctions were imposed before Skydio could find alternative suppliers. One of the sources said that the Chinese authorities had visited Skydio's suppliers, including Dongguan Poweramp, a subsidiary of Japan's TDK that makes batteries for drones, and ordered them to stop working with Skydio. On 30 October, Skydio notified its customers that it was limiting the number of batteries it ships with its drones due to Chinese sanctions and warned that new suppliers are not expected to come on stream until spring. Skydio is discussing the situation with companies in Asia, particularly in Taiwan. One source said that US officials had reached out to Asian allies to discuss ways to support the company. Skydio has also been in contact with Taiwan's Vice President Hsiao Bi-khim on the issue. The San Mateo-based company serves corporate and government clients, including the US military. It said it has sent more than 1,000 drones to Ukraine to gather intelligence and help record Russia's war crimes. Skydio said its newest model, the X10, was the first US drone to pass Ukraine's electronic warfare tests, which makes it harder to jam, and Kyiv has ordered thousands of such drones. China's actions come as the US Congress is considering a bill to ban Americans from using drones made by DJI, the Chinese company that dominates the global commercial drone market.
Further Reading:
Americans are going to the polls. Here’s how the US election works - World Economic Forum
China imposes sanctions on US drone supplier to Ukraine - Ukrainska Pravda
China’s watching the US election – but doesn’t see much hope for better ties - CNN
Luxembourg grain company still profiting despite Ukraine war - Luxembourg Times
Putin is making the most of a distracted and divided United States - Atlantic Council
UN General Assembly condemns the US economic embargo of Cuba for a 32nd year - Toronto Star
Themes around the World:
Impact of Consumer Confidence on Business Performance
Weakened consumer confidence, at its highest since 2022, significantly contributes to profit warnings, especially in retail and consumer-facing sectors. This dampens discretionary spending, disrupts demand forecasts, and pressures margins, necessitating adaptive strategies in marketing, supply chain management, and financial planning to mitigate revenue volatility.
Economic Controls Amid Conflict
Ukraine's central bank imposed strict financial controls including limits on cash withdrawals and bans on forex purchases to stabilize the economy amid Russia's invasion. These measures aim to prevent capital flight and banking sector instability but constrain liquidity and complicate business operations, impacting investment confidence and supply chain financing.
Geopolitical Risks in Supply Chains
A DP World and Supply Chain Dive study reveals 82% of North American supply chain leaders see geopolitical events as moderate to significant risks, with 78% expecting intensification. Despite a median 5% revenue loss from disruptions, only 25% feel very prepared. Companies are shifting supply chains and partnerships to mitigate inflation, tariffs, and sanctions impacts.
Stock Market Volatility and Sectoral Divergence
Indian equity markets face high volatility due to global uncertainties, geopolitical risks, and foreign outflows, with 62% of stocks down over 25% from their highs. While sectors like financials show strength, others like metals and FMCG lag. This uneven performance challenges portfolio management and reflects broader economic and policy uncertainties impacting investor confidence.
Surge in Foreign Direct Investment
Brazil experienced a 67% increase in foreign direct investment (FDI) in new productive projects from 2022 to 2025, reaching US$37 billion. This growth outpaces the global average and is driven by Brazil's geopolitical neutrality and diversification of investment sources, including Asia and the Middle East. Energy projects dominate, attracting nearly half of FDI, signaling robust sectoral opportunities.
Global Market Interconnectedness and Contagion Risks
The UK market remains sensitive to global financial shocks, such as potential US stock market corrections. Interconnected markets mean volatility abroad can transmit to UK equities and financial services, necessitating defensive investment approaches and diversification to mitigate contagion risks.
Investment and Job Market Contraction
Over one-third of German companies plan job cuts in 2026, particularly in industry, amid declining investment intentions. The prolonged investment slump and rising insolvencies signal deteriorating business confidence, threatening employment and economic recovery prospects.
Infrastructure Investment and Regulatory Barriers
Australia attracts significant global infrastructure capital, especially in renewables and data centers, driven by political stability. However, investor concerns over regulatory delays, environmental approvals, and labor costs impede project execution. Reforming planning and environmental legislation is critical to unlocking investment potential and sustaining infrastructure growth aligned with climate and economic goals.
US Tech Crackdown Risks Economic Loss
South Korea's aggressive antitrust actions against US tech giants like Google, Apple, and Amazon risk significant economic fallout. The Korea Fair Trade Commission's stringent regulations and fines could lead to $469 billion in losses for South Korea over the next decade, dampening innovation, foreign investment, and digital productivity, while straining US-Korea trade relations.
Investment Climate and Rankings
South Africa maintains its position as the fourth most attractive investment destination in Africa, despite slow economic growth and structural challenges. The country faces constraints such as high unemployment, infrastructure deficits, and energy supply issues, which dampen growth prospects. However, ongoing reforms and improved investor sentiment are gradually enhancing its investment climate.
Chinese Firms' Resilience in Europe
Despite rising labor costs and trade barriers, Chinese companies report stable or improved performance in the EU, with increased localization and investment, especially in Eastern Europe. However, geopolitical tensions and EU efforts to reduce dependency on China introduce uncertainties, requiring strategic adaptation by Chinese firms and their international partners.
Export Expansion and Diversification
Indonesia recorded US$209.8 billion in exports by September 2025, an 8.14% increase year-on-year, primarily driven by a 9.57% rise in non-oil and gas exports. Manufacturing and agriculture sectors led growth, enhancing Indonesia's trade profile and signaling resilience amid global commodity price fluctuations.
Rising Corporate Risk Perceptions in Europe
Credit default swap spreads for European corporate bonds have surged amid fears of escalation in Ukraine, reflecting heightened risk aversion among investors. This increase in perceived credit risk raises borrowing costs for European companies, potentially constraining investment and trade activities linked to the region.
Economic Slowdown and Recession Risks
Russia faces a potential recession by late 2025 after consecutive quarters of slowing GDP growth, with a contraction expected in Q4. Key sectors like mining and metallurgy are declining, while defense industries drive growth. Persistent inflation above 4% and labor market strains necessitate prolonged high interest rates, impacting business stability and investment climate.
Semiconductor Industry Dynamics
Israel's semiconductor sector, powered by startups and multinational R&D centers, drives global chip innovation with venture capital investments three times the national average. The sector supports AI and computing infrastructure worldwide, positioning Israel as a critical node in global supply chains amid shifting geopolitical and economic landscapes.
Monetary Policy and Bank of Japan (BoJ) Uncertainty
The BoJ maintains an ultra-loose monetary policy with cautious, gradual normalization. Uncertainty around the timing of interest rate hikes creates volatility in the yen and financial markets. The BoJ's stance contrasts with hawkish US Federal Reserve policies, impacting USD/JPY exchange rates and complicating Japan's inflation and growth outlook, influencing trade and investment decisions.
Climate Change Risks to Infrastructure
Approximately 60% of Mexican companies listed on the stock exchange face moderate to high physical risks from climate change, including droughts, floods, and hurricanes. Key sectors such as energy, mining, and transportation infrastructure are vulnerable, with recent events like Hurricane Otis causing significant economic losses. These environmental risks necessitate enhanced adaptation strategies and impact long-term investment and operational resilience.
EBRD Investment Surge in Turkey
The European Bank for Reconstruction and Development (EBRD) has significantly increased its investments in Turkey, allocating over $2.5 billion across 42 projects in 2025. Focus areas include energy transition, infrastructure, SMEs, and innovation. Istanbul is set to become a regional hub, enhancing Turkey's role in Eurasian trade and green economy development, boosting investor confidence.
Foreign Reserves and Fiscal Discipline
Egypt's net international reserves surpassed $50 billion in October 2025, marking a historic milestone. This strong reserve position supports exchange rate stability, import coverage, and external debt servicing. Concurrently, public debt has been reduced by about 10% of GDP over two years, reflecting effective fiscal consolidation and enhancing macroeconomic stability and sovereign creditworthiness.
US-Saudi Trade and Investment Relations
The US-Saudi economic relationship is evolving with increased Saudi investments in US technology, entertainment, and defense sectors, alongside Saudi demand for advanced US technologies. Despite a declining share of bilateral trade, financial ties deepen through sovereign wealth fund activities, supporting Vision 2030’s diversification and fostering strategic economic collaboration between the two nations.
Impact of FATF Blacklisting
Iran remains on the FATF high-risk list due to alleged non-compliance with anti-money laundering and counter-terrorism financing standards. This status restricts Iran's access to international banking, increases transaction costs by 10-25%, and complicates trade, even humanitarian imports. Despite legislative efforts, political opposition and Western influence hinder Iran's financial integration, exacerbating economic isolation amid U.S. sanctions.
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.
K-Beauty and Consumer Sector Expansion
South Korea’s cosmetics industry is a global leader, ranking third in export volume and expected to surpass the US in overseas sales. Innovative product design, digital marketing, and cultural influence drive growth. This sector offers attractive investment opportunities, diversifying South Korea’s export base beyond technology and enhancing its consumer market appeal internationally.
Environmental and Social Concerns in Mining Expansion
The government's push to develop rare earth mineral resources faces opposition from environmentalists and local communities due to past mining pollution and ecological risks. Balancing economic benefits with sustainable practices and community trust is critical to avoid social unrest and reputational damage, especially in regions reliant on tourism and agriculture.
Rising Corporate Default Risks in Europe
Credit default swap spreads for European corporate bonds surged amid fears of Russian invasion, reflecting heightened risk aversion. This increase in default insurance costs signals investor concerns over regional stability, potentially raising borrowing costs for businesses operating in or trading with Ukraine and neighboring countries.
Currency Volatility and Sterling Depreciation
The British Pound faces intense pressure due to weak labor market data, political instability, and looming fiscal tightening. Sterling's depreciation against the Euro and US Dollar reflects market concerns over UK economic resilience, complicating trade and investment strategies reliant on currency stability.
Russia’s Economic Adaptation and Resilience
Russia has developed a unique economic model emphasizing self-reliance, sanction circumvention, and strengthened ties with non-Western partners like China, India, and Iran. Despite sanctions, it maintains stability through diversified trade, alternative financial systems, and strategic BRICS cooperation, though long-term prospects remain challenged by technological obsolescence and stagflation risks.
US-China Trade Tensions and Transshipment Risks
Despite a Trump-Xi trade truce, US tariffs and trade policies continue to pressure Chinese exports, with a notable 27% year-on-year drop in shipments to the US. Rising transshipments through third countries complicate enforcement, while potential US country-of-origin rules pose further risks to Chinese goods' market access, impacting global supply chains and trade flows.
US-China Diplomatic Engagements
High-level US-China summits and diplomatic dialogues are critical for stabilizing bilateral relations and global markets. Positive diplomatic signals can reduce geopolitical risk premiums, fostering investor confidence and market stability. Ongoing discussions focus on trade imbalances, technology competition, and regional security, shaping future economic cooperation and regulatory landscapes.
Decline in Greenfield Manufacturing Projects
UNCTAD reports a sharp decline in greenfield manufacturing investments in India, driven by high US tariffs and global uncertainties. This contraction hampers capacity expansion, supply chain diversification, and job creation in key sectors like textiles and electronics, potentially slowing India's industrial growth and integration into global value chains.
Corruption Scandals in Energy Sector
A major corruption scandal involving a $100 million kickback scheme in Ukraine's state-owned energy companies, including Energoatom, has implicated close associates of President Zelenskyy. This undermines governance credibility, risks alienating Western allies, and threatens continued financial and military support critical for Ukraine's war effort and economic stability.
Fiscal Risk Premium Ahead of Autumn Budget
Investor anxiety over the UK government's fiscal policies ahead of the Autumn Budget has led to a rising fiscal risk premium on the Pound. Concerns about tax hikes and public debt sustainability are driving volatility in currency, bond, and equity markets, affecting investor confidence and capital allocation.
Singapore Family Offices Eye Korean Investments
Singapore's family offices increasingly target South Korea for investment, attracted by growth in semiconductors, AI, healthcare, and consumer sectors like cosmetics. Structural shifts in corporate governance and ample liquidity enhance private equity opportunities, while favorable valuations and a weak won boost foreign investor interest in Korean real estate and innovation ecosystems.
Impact of US Sanctions on Russian Oil
US sanctions targeting Russia's top oil producers, Rosneft and Lukoil, have significantly disrupted Russian crude exports. These measures have led to reduced shipments, increased floating storage, and forced buyers like India and China to reconsider purchases. The sanctions impose a pricing discount on Russian oil, squeezing Kremlin revenues and threatening global oil supply dynamics.
Geopolitical Risks Affecting Energy Infrastructure
Ukrainian attacks on Russian oil ports and refineries, including Novorossiysk and Saratov, have heightened geopolitical tensions. These assaults aim to reduce Moscow's energy revenue, impacting supply chains and increasing volatility in global oil markets. The resulting infrastructure damage adds uncertainty to Russia's energy export capabilities.
Inflation and Monetary Policy Challenges
Persistent inflationary pressures in Australia have led the Reserve Bank to revise forecasts upward, delaying interest rate cuts until at least late 2026. A tight labor market and external economic uncertainties complicate monetary policy, impacting borrowing costs, consumer spending, and investment decisions, with implications for economic growth and financial market stability.