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:
Energy Security Drives Cost Risk
Japan’s dependence on Middle Eastern energy has become a major operational risk: roughly 95% of crude imports and 11% of LNG come from the region. Strait disruptions, offline Qatari LNG capacity, and emergency stockpile releases raise fuel, shipping, and manufacturing costs.
Tourism Investment Opening Expands
Tourism has become a major investment channel, with SAR452 billion committed and 122 million visitors in 2025. Full foreign ownership under the 2025 Investment Law, tax incentives and PPP support expand opportunities across hospitality, logistics, services and consumer-facing operations.
Santos Port Logistics Disruptions
A 24-hour truckers’ stoppage at the Port of Santos could involve around 5,000 drivers protesting yard-access fees of roughly R$800 per day. At Latin America’s largest port, even short disruptions can delay agricultural exports, container flows, and inland supply-chain scheduling.
Quality Rules Complicate Market Access
India’s expanding Quality Control Orders and certification requirements continue to affect imports of components, chemicals and industrial inputs. While supporting domestic manufacturing objectives, unclear timelines and burdensome compliance can delay sourcing decisions, increase testing costs and disrupt multinational supply-chain planning.
Energy Windfall Masks Fragility
Higher oil and commodity prices have temporarily lifted Russia’s export earnings and fiscal revenues, with Urals near or above Brent and some estimates showing billions in extra monthly receipts. But the gain remains volatile, politically contingent, and vulnerable to demand destruction.
Energy Security Investment Push
Despite price shocks, Turkey reports no immediate supply shortage, citing diversified sourcing, 71% gas storage levels, and domestic projects in Sakarya, Gabar, Somalia, and Akkuyu. These investments could improve resilience, but also redirect fiscal resources and influence industrial competitiveness over time.
European Sanctions Path Turns Uncertain
EU plans for a twentieth sanctions package have slowed amid energy-market turmoil and internal divisions involving Hungary, Slovakia, Greece, and Malta. This uncertainty complicates scenario planning for investors, especially around maritime services, LNG exposure, and the future scope of restrictions on Russian trade.
Infrastructure Delays Affect Logistics
Thailand’s 3-Airport High-Speed Rail project still awaits contract amendments, with July 2026 set as a critical deadline. Continued delays risk slowing logistics modernization, raising execution uncertainty for connected industrial zones and limiting long-term efficiency gains for transport-reliant investors and suppliers.
Energy Import Vulnerability and Subsidies
Indonesia remains exposed to imported oil and gas, especially from the Middle East, while global price spikes sharply increase subsidy costs. This creates operational risk through fuel volatility, logistics costs, and possible policy adjustments affecting transport, manufacturing, and energy-intensive sectors.
Logistics Shock from Middle East
Middle East tensions are disrupting Vietnam’s trade routes, pushing freight costs sharply higher and extending shipments by 10–14 days or more. Some exporters report logistics costs up 15–25%, undermining delivery reliability, margins, and inventory planning across key export sectors.
China Dependence Spurs Localization
India is tightening its focus on vulnerable import dependence while selectively allowing capital into strategic manufacturing. The trade deficit with China has widened beyond $100 billion, reinforcing incentives for joint ventures, component localization, and domestic production in electronics, solar inputs, batteries, and rare earth processing.
Trade Diversification Beyond China
Recent policy moves show Australia accelerating diversification after earlier China-related trade disruptions and amid renewed US tariff pressures, reducing concentration risk for exporters and investors but requiring firms to recalibrate market-entry plans, compliance frameworks and partner strategies across Europe and Asia.
Labor Reforms Increase Industrial Friction
Government labor-market reforms have weakened Finland’s traditional consensus model and previously triggered major union strikes. Although aimed at flexibility, the changes increase uncertainty around industrial relations, wage bargaining and operational continuity, especially for exporters, manufacturers, ports, and logistics-dependent businesses.
Digital Infrastructure Investment Surge
Thailand is attracting major data-centre and AI-related investment, including a potential $6 billion Bridge Data Centres loan. The sector could grow 27.7% annually through 2031, but tighter licensing, resource consumption concerns and zoning rules may raise compliance costs.
Manufacturing Costs Rising Again
Taiwan’s manufacturing sector is still expanding, but March PMI slowed to 53.3 from 55.2 as Middle East disruptions lengthened delivery times and pushed input costs higher. Exporters face renewed margin pressure from freight, raw materials, energy, and insurance costs.
Property Crisis and Debt Overhang
China’s property downturn continues to depress demand, finance, and local government revenues. Sales are projected to fall another 10% to 14% this year, while household wealth remains heavily exposed, weakening consumption and increasing payment, counterparty, and credit risks across the economy.
Hormuz Chokepoint and Shipping Controls
Iran’s effective control of the Strait of Hormuz has slashed transits by roughly 90-95%, raised war-risk insurance, and introduced IRGC clearance and toll demands, disrupting oil, LNG, container flows, delivery schedules, and compliance planning for firms reliant on Gulf shipping.
Cross-Strait Security Escalation Risks
Chinese military drills and blockade scenarios remain Taiwan’s most consequential business risk, threatening shipping lanes, insurance costs, just-in-time manufacturing and semiconductor exports. Firms should stress-test logistics continuity, cyber resilience and inventory buffers against sudden transport, market and financial disruptions.
LNG Exposure Threatens Operations
Energy security is a major operational vulnerability: about one-third of Taiwan’s LNG previously came from Qatar, while onshore reserves are only around 11 days, rising to 14 next year. Any prolonged disruption could affect power-intensive manufacturing, including semiconductors and chemicals.
Skilled Labour Shortages Deepen
Demographic ageing is tightening labour availability across construction, logistics, healthcare, energy and manufacturing. Germany needs roughly 400,000 foreign skilled workers annually, but visa delays, administrative bottlenecks and retention challenges raise operating costs and constrain expansion plans for employers.
High Rates Squeeze Investment Planning
Elevated financing costs and inflation pressures continue to constrain private investment despite selective state support. Expert RA expects the policy rate to fall only gradually toward 12% by end-2026, while possible tax increases and weakening profitability raise refinancing, expansion, and SME solvency risks.
CPEC 2.0 Investment Expansion
Pakistan and China signed about $10 billion in agreements under CPEC Phase 2.0, spanning agriculture, minerals, electric vehicles, and local manufacturing. If implementation improves, this could deepen industrial capacity and corridor connectivity, though security, execution risk, and trade imbalances remain important constraints for investors.
Nickel tax and quota squeeze
Jakarta is tightening nickel policy through possible export duties, higher benchmark prices and stricter RKAB quotas, lifting ore costs and reshaping global battery and stainless supply chains. Proposed levies on NPI, MHP and matte could compress smelter margins and delay investment.
Weak Growth, Higher Insolvencies
Economic institutes cut Germany’s 2026 growth forecast to 0.6% and 2027 to 0.9%, while 24,064 firms filed for insolvency in 2025, the highest since 2014. Sluggish demand and elevated financing costs are raising counterparty and market risks.
Naphtha Supply Chain Stress
South Korea imports roughly 45% of its naphtha, with 77% historically sourced from the Middle East. Plant shutdowns at LG Chem and force majeure warnings across petrochemicals threaten downstream supplies for plastics, electronics, autos and industrial materials used in export manufacturing.
Foreign Investment Screening Tightens
Berlin is considering stricter scrutiny of foreign takeovers and tougher market-entry conditions, including possible joint-venture expectations in sensitive sectors. For international investors, this signals a more interventionist policy environment around technology, industrial resilience and strategic assets.
Inflation, Rates and Shekel Volatility
The Bank of Israel held rates at 4% as war-driven energy costs, wage pressures and supply constraints lifted inflation risks. Fuel could exceed NIS 8 per liter, while shekel volatility complicates pricing, hedging and tax planning for importers, exporters and multinationals.
Fiscal Stress And Austerity
Higher global energy prices and domestic spending pressures are prompting budget refocusing, including potential savings of Rp121.2-130.2 trillion and cuts to the free meals program. Fiscal strain raises risks around subsidies, payment cycles, public procurement, and macro policy unpredictability for investors.
Energy nationalism and Pemex strain
Energy policy remains a major investor concern as U.S. negotiators challenge restrictions on private participation. Pemex posted a 45.2 billion peso loss in 2025, carries 1.53 trillion pesos of debt, and supplier arrears are disrupting energy-related SME supply chains and project execution.
Import Substitution Weakens Industrial Quality
Russian manufacturers still rely heavily on imported components despite localization claims. In machine tools, final products may be 70% domestic, yet 80-95% of CNC systems and sensors remain imported. The result is lower quality, rising costs, and persistent fragility in industrial supply chains.
Hormuz Transit Control Risks
Iran’s de facto IRGC-controlled transit regime in the Strait of Hormuz has sharply reduced normal vessel traffic, imposed clearance and disclosure requirements, and reportedly involved yuan-denominated tolls, materially raising shipping, insurance, sanctions, and legal exposure for global traders.
State Ownership and Privatization Push
The government is updating its State Ownership Policy to reduce preferential treatment for state entities, improve asset governance, and expand private-sector participation. For international investors, this could open acquisitions and partnerships, though execution risk, policy reversals, and uneven competitive neutrality remain important concerns.
Red Sea Logistics Hub
Saudi Arabia is rapidly strengthening its role as a regional logistics fallback. New shipping services, a Khorfakkan-Dammam corridor, and a 1,700-km rail link to Jordan are cutting transit times, supporting cargo continuity and improving resilience for multinational supply chains.
U.S. Tariff Pressure Escalates
Approaching the July 1 CUSMA review, Canada faces continued U.S. tariffs on steel, aluminum, autos and lumber, plus new Section 301 probes. With 76% of Canadian goods exports historically going south, policy uncertainty is dampening investment, pricing and cross-border supply planning.
Sector Tariffs Hit Critical Inputs
Washington has imposed new pharmaceutical tariffs reaching 20% to 100% for some producers, while retaining 50% duties on many steel, aluminum, and copper imports. These measures raise input uncertainty for healthcare, manufacturing, construction, energy, and industrial equipment supply chains.
US Tariff Exposure Intensifies
Japan’s trade outlook is being reshaped by US tariff risk despite a new bilateral deal lowering a proposed blanket rate from 25% to 15%. Uncertainty over separate 25% auto tariffs and fresh Section 301 probes threatens exporters, investment planning, and cross-border pricing strategies.