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:
US-Mexico Financial Sanctions Impact
The US Treasury sanctioned three major Mexican financial institutions (CIBanco, Intercam, Vector) for alleged money laundering linked to drug cartels, restricting their access to US financial systems. This unprecedented move disrupts cross-border financial flows, increases regulatory scrutiny, and risks destabilizing Mexico’s banking sector, complicating international trade financing and investment confidence.
Geopolitical Tensions Impacting Oil Prices
The ongoing Iran-Israel conflict and Middle East instability have caused fluctuations in global oil prices, directly affecting UK energy costs and inflation. Potential closure of the Strait of Hormuz threatens supply chains, increasing risks of price shocks. UK businesses and consumers face higher operational and living costs, influencing investment decisions and supply chain resilience.
Judicial Independence and Rule of Law Crisis
Turkey faces a severe erosion of judicial independence and rule of law, highlighted by systematic non-compliance with European Court of Human Rights rulings and political interference in the judiciary. This undermines investor confidence, complicates international legal cooperation, and risks sanctions or restrictions from the EU, impacting trade agreements and foreign direct investment.
Russian Espionage Targeting Vulnerable Youth
Russia’s recruitment of financially vulnerable Ukrainian teenagers for espionage and sabotage poses internal security threats, destabilizing social cohesion and complicating business environments. This covert warfare tactic undermines trust, increases operational risks for enterprises, and necessitates heightened security measures impacting workforce stability and investor confidence.
Geopolitical Realignment and Trade Risks
Brazil’s foreign policy under President Lula is shifting away from the US towards China, Russia, and Iran, straining traditional alliances. This realignment impacts trade relations, digital governance, and political ties, risking reduced access to Western markets and technology. The pro-Iran stance and digital censorship requests heighten geopolitical and business uncertainties.
Political Instability and Government Crisis
Prime Minister Paetongtarn Shinawatra faces mounting political turmoil following a leaked phone call with Cambodian leader Hun Sen. The scandal has fractured her coalition, triggered mass protests, and led to criminal complaints and potential Constitutional Court actions. This political instability risks policy paralysis, undermines investor confidence, and raises the specter of another military coup.
European Financial and Security Credibility
The European Central Bank's refusal to utilize frozen Russian assets to support Ukraine undermines Europe's geopolitical credibility and security posture. This hesitancy prolongs conflict, exposes Europe to Russian aggression, and risks investor confidence, potentially leading to increased defense spending, economic strain, and political fragmentation within the EU.
Eurasian Economic Union Integration
The Eurasian Economic Union (EAEU) has doubled mutual trade to $97 billion, with 93% of payments in national currencies, reflecting deepening regional economic integration. Russia emphasizes strengthening the EAEU's global influence and reducing reliance on Western financial systems, which affects trade partnerships, currency risk management, and regional supply chain strategies.
Shekel Currency Strength and Foreign Exchange
The Israeli shekel has strengthened significantly against the US dollar and euro, driven by reduced risk premium and foreign investor optimism. Currency appreciation affects import-export competitiveness, inflationary pressures, and monetary policy, influencing business operations and international trade flows.
Impact of Wildfires and Climate-Related Disasters
Increasing frequency and severity of wildfires in Canada and allied countries have prompted discussions on emergency response coordination, including equipment interoperability and satellite monitoring. Climate-related disasters threaten infrastructure, supply chains, and operational continuity, compelling businesses to integrate resilience and sustainability into strategic planning.
Russian Commodity Market Influence
Russia's dominant role in global platinum production (over 90% via Nornickel) and competitive pricing in coal exports, notably to India, significantly impact international commodity markets. Supply deficits and geopolitical tensions have driven platinum prices up by over 50% in 2025, while Russian coal exports to India hit a two-year high, affecting global supply chains and trade flows.
Political Polarization and Uncertainty
Brazil’s political landscape is sharply divided, with Bolsonarists reaching parity with Lula supporters. This polarization fuels legislative gridlock, policy unpredictability, and social tensions. The ongoing feud between political factions undermines institutional confidence, delays reforms, and increases volatility, complicating the environment for long-term investment and business planning.
Investment Shifts Amid Geopolitical Uncertainty
Investor strategies are adapting to geopolitical tensions, favoring defense, cybersecurity, and technology sectors poised to benefit from increased government spending and security demands. Stock market volatility persists, but selective growth stocks in AI, surveillance, and energy storage are attracting capital. Market resilience depends on conflict escalation and energy price trajectories, influencing global capital flows and risk assessments.
External Financing and Debt Sustainability
Pakistan faces substantial medium-term gross financing needs exceeding $100 billion through 2030, compounded by limited IMF SDR allocations and climate-induced economic shocks. Persistent trade deficits and import dependency strain foreign exchange reserves, challenging debt sustainability. Without enhanced multilateral support and export growth, Pakistan risks exacerbated debt distress, impacting fiscal space and investor confidence.
Declining Country Risk Premium
Israel's risk premium has notably decreased following military operations and geopolitical developments, leading to rising asset prices, stronger shekel, and improved borrowing costs. This trend reflects growing investor confidence despite regional tensions, influencing foreign direct investment inflows, capital market performance, and strategic financial planning for businesses operating in Israel.
US Trade Policy and Tariff Risks
The Trump administration's plans to impose new tariffs ranging from 10% to 70% on multiple countries, including Vietnam, signal potential disruptions in bilateral trade relations. Despite some trade agreements, the looming threat of tariff escalation introduces uncertainty for Vietnam's export-driven economy, impacting investment strategies and supply chain planning.
Geopolitical Tensions Impacting Trade
Ongoing geopolitical conflicts, including the Ukraine war and Middle East tensions, significantly disrupt global supply chains and commodity markets. Russia faces challenges from NATO-related dynamics, regional instability in Central Asia, and Western political pressure aiming for regime change, all of which create uncertainty for international trade, investment risk assessments, and operational planning within Russia.
Inflation and Consumer Price Trends
Japan’s core consumer prices rose 3.7% year-on-year in May 2025, maintaining inflation above the BOJ’s 2% target since 2022. Persistent inflation affects consumer spending, wage negotiations, and corporate cost structures, necessitating adaptive strategies for businesses and investors.
Regulatory Scrutiny of Financial Advice and Market Integrity
The Australian Securities and Investments Commission’s crackdown on unlicensed financial advisors and misleading 'finfluencers' highlights risks to consumer protection and market integrity. This regulatory focus aims to safeguard investors from high-risk products and deceptive practices, reinforcing the importance of credible financial guidance in maintaining confidence in Australia’s financial markets.
Foreign Investment Dynamics Amid Conflict
Despite geopolitical conflicts, Pakistan has maintained foreign investment inflows in treasury bills, though equity markets experienced outflows. Investment patterns reflect risk aversion and preference for secure instruments amid instability. Sustained efforts to attract foreign direct investment face challenges from political risks and economic uncertainties, impacting capital availability for business expansion and infrastructure development.
Cybersecurity Threats and Infrastructure Defense
Iran faces significant cyberattacks targeting its banking and economic infrastructure, especially during periods of heightened conflict. The country’s ability to withstand these attacks and maintain service continuity is critical for safeguarding trade, financial transactions, and investor confidence. However, ongoing cyber threats represent a persistent risk to business operations and international partnerships.
Rising Crime and Security Challenges
High levels of violent crime, including mass shootings and armed confrontations, persist in South Africa, undermining public safety and investor confidence. Police operations targeting hotspots have led to numerous arrests, but ongoing insecurity poses risks to business continuity, supply chain logistics, and workforce stability, necessitating enhanced security measures and risk mitigation strategies.
Energy Sector Regulatory and Infrastructure Bottlenecks
Brazil’s rapid expansion in wind and solar energy faces a severe crisis due to inadequate transmission infrastructure and unfavorable regulatory changes. Curtailments have caused significant financial losses and job cuts, discouraging investment. High interest rates and delayed grid upgrades threaten the sustainability of Brazil’s clean energy ambitions, impacting energy security and industrial competitiveness.
Climate Change Adaptation Costs
Canadian businesses face rising costs adapting to climate change, with sectors like utilities, insurance, and industrial services most affected. Investments in resilience, such as infrastructure upgrades and sustainability-linked insurance, are increasing. Despite challenges in financing long-term adaptation, every dollar invested yields over tenfold benefits. This trend influences supply chains, risk management, and investment strategies amid growing climate-related disruptions.
Government Fiscal and Monetary Policy
State budget deficits and rising public debt, combined with Reserve Bank of Australia’s cautious approach to interest rate adjustments amid inflation volatility, shape the macroeconomic environment. Fiscal discipline and monetary policy responses will influence investment climate and economic resilience.
Geopolitical Risks in Central Asia and Eurasia
Escalating conflicts in the Middle East and potential destabilization of Iran pose direct security threats to Russia’s strategic interests in Central Asia. Instability could facilitate foreign interference and disrupt regional supply chains and investment climates, necessitating heightened risk management for businesses operating in or through Eurasian corridors.
Manufacturing Sector Growth and Export Surge
India's manufacturing sector reached a 14-month high in June 2025, driven by robust export demand, particularly from the US. Increased production, employment, and improved supply chain efficiencies underpin this growth. Despite easing input cost inflation, firms are passing on higher costs to customers, signaling strong domestic and international market confidence.
Energy Independence and Supply Risks
Global conflicts involving major oil producers like Iran and Russia highlight the urgency for the US to achieve energy independence. Reliance on foreign energy exposes the US and allies to supply disruptions and price volatility. Domestic fossil fuel reserves in regions like the Permian Basin and Marcellus Shale represent strategic assets to mitigate geopolitical risks and stabilize energy markets.
Impact of Tariffs on U.S. Economy
Tariffs have raised import costs, contributing to inflationary pressures and complicating Federal Reserve monetary policy. Manufacturing sectors report declining orders due to price uncertainty. While some corporations announce long-term investments, overall business confidence is dampened by unpredictable trade policies, leading to reduced capital expenditures and slower economic growth.
China-Iran Strategic Economic Ties
China's deepening economic partnership with Iran, including a $400 billion 25-year cooperation agreement and the new China-Iran rail corridor, enhances China's Belt and Road Initiative reach. However, ongoing Middle East conflicts and US sanctions pose significant risks to trade routes, energy security, and supply chain stability, impacting China's global trade and investment strategies.
Electric Vehicle Industry Challenges
Thailand’s EV sector faces financial and operational risks highlighted by NETA Auto’s liquidity crisis and unpaid government subsidies totaling up to ฿400 million. Dealer network contraction and rising insurance premiums threaten after-sales service and warranty support, jeopardizing Thailand’s ambitions to become a regional EV manufacturing and export hub.
Geopolitical Uncertainty and Market Volatility
The complex geopolitical landscape, including Russia’s invasion and regional conflicts like the Israel-Iran war, fuels global market uncertainty and inflationary pressures. Investors face difficulties assessing risks due to multifaceted political, economic, and security factors. Weakening multilateral institutions and divergent national interests exacerbate systemic risks, influencing international trade flows and investment strategies related to Ukraine and the broader region.
Energy Sector Challenges and Opportunities
Regional tensions have disrupted natural gas supplies, prompting Egypt to activate emergency plans and secure additional LNG shipments. Rising global oil prices and increased shipping insurance premiums elevate costs for energy imports. Simultaneously, Egypt is investing in renewable energy projects like the $200 million solar manufacturing hub in Ain Sokhna to diversify energy sources and boost industrial capacity.
Cross-Border Corruption and Money Laundering
A large-scale corruption and money laundering ring involving Thai and Cambodian labor officials exploits foreign workers through extortion and illicit fees, potentially exceeding ฿6 billion. This undermines labor market integrity, increases operational risks for businesses relying on migrant labor, and highlights governance challenges affecting bilateral relations and economic cooperation.
Geopolitical Military Spending Pressures
NATO's push for increased defense spending, influenced by US demands, reflects shifting geopolitical dynamics that indirectly affect Vietnam's trade and investment climate. Heightened global military tensions may impact regional stability, supply chain security, and international economic cooperation, necessitating strategic risk assessments by investors.
Canada’s NATO Defence Spending Commitments
Canada’s commitment to allocate 5% of GDP to defence, including 1.5% for infrastructure, opens opportunities to fund projects with dual civilian and military uses, such as Arctic ports and critical mineral supply chains. This broad definition supports strategic infrastructure investments that enhance national security, industrial base resilience, and international defence collaboration, impacting public spending priorities.