Mission Grey Daily Brief - November 10, 2024
Summary of the Global Situation for Businesses and Investors
The world is bracing for another series of shocks as Donald Trump is set to assume office in January following his election victory. Trump's return to power has heartened some of America's long-time rivals, particularly Moscow, while worrying many of its friends. Instead of seeing peace on the horizon, a world already in turmoil is preparing for another series of shocks. Trump's proposed economic policies, including a 60% tariff on Chinese imports and a 10% tariff on all U.S. imports, are expected to have broad economic implications for China and Taiwan, respectively. Trump's win has also boosted the chances of Netanyahu remaining in power until Israel's 2026 elections. In Ukraine, there are fears that Trump plans to force a peace deal on Kyiv by cutting off the flow of U.S. military aid. Trump's victory has also sparked uncertainty over how long Western support for Ukraine will continue, with Hungary's leader predicting that a new U.S. administration under Trump will cease providing support to Ukraine.
Trump's Tariff Bombshell: Implications for China and Taiwan
U.S. President-elect Donald Trump's proposed economic policies include a 60% tariff on Chinese imports and a 10% tariff on all U.S. imports. These policies are expected to have broad economic implications for China and Taiwan, respectively. Taiwan's Economics Minister Kuo Jyh-huei has outlined plans to help companies shift production and minimize the impact on Taiwan's critical tech and electronics sectors. Taiwan's government is preparing policies to support companies looking to diversify their supply chains and adapt to shifting trade policies. Taiwan, whose firms have invested heavily in China over the past four decades, is closely watching how these tariffs could affect Taiwanese companies that have historically relied on China's lower production costs.
Japan's Military Buildup and Alliance with the U.S.
Japan's Prime Minister Shigeru Ishiba has renewed a pledge to build up Japan's military and deepen its alliance with the U.S. under President-elect Donald Trump. Ishiba cited escalating tensions with China, Russia, and North Korea as reasons for strengthening Japan's military power. He also pledged to pursue the ongoing military buildup plan under the 2022 security strategy, which calls for a counter-strike capability with long-range cruise missiles, a break from Japan's self-defence only principle. Ishiba's governing coalition, however, lost a recent parliamentary election, which could make it difficult to pursue his party's planned policies and budget plans in the coming months.
Western Parts Found in Russian Weapons
Ukraine has found Western-made parts inside the wreckage of a new heavy Russian combat drone that crashed last month. Ukraine's military intelligence agency said that an analysis of the S-70 Okhotnik, or "Hunter," drone that was downed over eastern Ukraine in early October, revealed components made by companies in the U.S. and Europe. Officials found microelectronics and other technological components inside the wrecked drone made by U.S.-based companies Analog Devices, Texas Instruments, and Xilinx-AMD, as well as Infineon Technologies in Germany and STMicroelectronics in Switzerland. Ukraine uploaded purported evidence of the Western-made parts to a government portal, where several other companies were listed. Business Insider reached out to the companies mentioned in the HUR's statement and received a response from four of them. Infineon, ST, Texas Instruments, and Analog said that since the start of the Ukraine war in 2022, they have taken steps to prevent their technologies from falling into Russia's hands in violation of sanctions and export control measures. The recent find marks the latest discovery of Western-made components inside Russian weapons, despite widespread international sanctions aimed at curbing Moscow's war efforts.
Syrian Refugees Returning to Syria
Hundreds of thousands of Syrian refugees have returned to their country since Israel launched a massive aerial bombardment on wide swathes of Lebanon in September. Many who fled to Lebanon after the war in Syria started in 2011 did not want to go back. But for officials in Lebanon, the influx of returnees comes as a silver lining to the war between Israel and Hezbollah that has killed more than 3,000 people and displaced some 1.2 million in Lebanon. Some in Syria hope the returning refugees could lead to more international assistance and relief from western sanctions. Lebanon's caretaker Minister of Social Affairs Hector Hajjar told Russia's Sputnik News last month that the war in Lebanon could yield “a positive benefit, an opportunity to return a large number of displaced Syrians to their country, because the situation there is now better than here." Political leaders in Lebanon, which was hosting an estimated 1.5 million Syrian refugees before the recent wave of returns, have been calling for years for the displaced to go home, and many don't want the refugees to return.
Further Reading:
Newspaper headlines: US economy 'overheating' and 'Ukraine fears' - BBC.com
US to send contactors to Ukraine to repair, maintain US weapons - VOA Asia
Themes around the World:
Gas Supply Constraints Hit Industry
Declining domestic gas production, maturing fields, and limited Israeli supply have turned Egypt into a costlier hydrocarbon importer. LNG prices are reportedly triple last year’s contracted levels, raising risks of electricity rationing and disruption for fertilizers, steel, cement, and other heavy industry.
Power Mix and LNG Security
Japan is considering temporarily raising coal-fired generation as war-related disruption threatens LNG imports through Hormuz. About 4 million tons of LNG annually transit the route, so utilities and industrial users should prepare for fuel switching, electricity cost volatility, and sustainability trade-offs.
High-Tech FDI Upgrade Drive
Vietnam is attracting larger technology-led projects, including a US$1.2 billion electronics investment, while disbursed FDI rose 8.8% to over US$3.2 billion in early 2026. This supports deeper integration into electronics, digital infrastructure, and advanced manufacturing supply chains despite cautious investor expansion.
Nuclear Policy Reversal Reshapes Power
Taipei is moving to restart Guosheng and Ma-anshan nuclear plants, with possible reactivation from 2028-2029 pending safety reviews. The shift reflects AI-driven electricity demand, decarbonization pressures and supply-security concerns, affecting long-term industrial power pricing, grid reliability and investment planning.
External Accounts and Remittance Reliance
Pakistan posted a $427 million February current-account surplus, helped by remittances and restrained imports, yet vulnerabilities remain acute. Over half of remittances come from Gulf economies, so regional conflict could cut inflows, pressure the rupee and tighten external financing.
Defense Export Boom Deepens
South Korea’s defense exports reached $15.4 billion in 2025, up 60.4% year on year, with prospects above $27 billion this year. Expanding contracts in Europe and the Middle East are boosting industrial output, localization investment, and supplier networks.
Oil shock reshapes outlook
Middle East-driven oil prices above US$110 per barrel are lifting Brazil’s inflation risks and slowing expected easing by the central bank. Although Brazil is a net oil exporter, imported fuel derivatives still raise freight, aviation, and food-chain costs across supply networks.
Technology Export Controls Tighten
Fresh evidence that restricted Nvidia AI chips reached Chinese entities via Southeast Asia is intensifying pressure for stricter US export enforcement. Businesses face higher licensing uncertainty, tougher end-user scrutiny and greater disruption risk across semiconductors, cloud, data-center and advanced manufacturing supply chains.
Black Sea Corridor Remains Vital
Ukraine’s Black Sea corridor remains essential for grain and commodity exports, but merchant shipping still faces missile, drone and mine risks. Higher war-risk premiums, stricter operating windows, and recurring attacks keep maritime logistics costly, volatile, and strategically important for global supply chains.
Persistent Imported Inflation Pressures
Core inflation has remained above the BOJ’s 2% target for nearly four years, reinforced by weak-yen import costs and higher energy prices. Companies operating in Japan should expect continued wage pressure, pricing adjustments, and tighter scrutiny of procurement and consumer demand resilience.
Growth Weakens, Demand Softens
INSEE cut first-half growth forecasts to 0.2% per quarter, while the flash composite PMI fell to 48.3 and consumer confidence to 89. Slower consumption, flat business investment and weaker export demand point to a tougher operating environment.
Regional Conflict Transmission Risks
The Iran war is now directly shaping Turkey’s macro outlook through energy, trade, and market channels. Fitch warned that a prolonged conflict could widen the current-account deficit and complicate disinflation, while tighter liquidity and volatility could disrupt financing and supply planning.
US-China Decoupling Deepens Further
Direct US-China goods trade continues to contract sharply, with China’s share of US imports falling to about 7% in 2025 from 23% in 2017. Supply chains are shifting toward Vietnam, Mexico, India, and Taiwan, raising transshipment, rules-of-origin, and geopolitical exposure.
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.
Russia Sanctions Maritime Enforcement
London has authorized boarding and detention of sanctioned Russian shadow-fleet tankers in British waters. With more than 500 vessels sanctioned and roughly 75% of Russian crude using such ships, shipping, compliance, insurance, and routing risks are rising materially.
Electricity Reform Unlocks Investment
Power-sector reform is improving the operating environment through Eskom restructuring, a new transmission company and wider private participation. More than 220GW of renewable projects are in development, with 36GW in grid processes, supporting energy security, industrial expansion and foreign direct investment.
Regulatory Reforms Improve Entry
Authorities are amending housing and real-estate laws to simplify procedures, reduce compliance burdens, and improve legal consistency. Combined with efforts to clear blocked investment projects, reforms should support foreign investors, though execution risk and uneven local implementation remain important operational considerations.
Energy Shock Hits Costs
Middle East disruption is pushing diesel above €2.10 per litre and could cut growth by 0.3-0.4 points if oil holds at $100. Transport, agriculture, fisheries, aviation and energy-intensive manufacturers face margin pressure, price volatility and demand risks.
Oil Sanctions Policy Volatility
Iran’s oil trade is shaped by tightening sanctions enforcement alongside temporary US waivers for cargoes already at sea. This creates exceptional compliance uncertainty for traders, shippers, refiners, and banks, while distorting pricing, counterparties, and near-term supply availability.
High Capital Costs Constrain Investment
Despite the rate cut, Brazil still maintains one of the world’s highest real interest rates, while transmission-sector equity cost estimates rose to 12.50%. Expensive capital can deter smaller entrants, compress project returns and slow expansion plans in infrastructure and industry.
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.
Inflation and Rates Turn Riskier
The SARB held the repo rate at 6.75%, but oil shocks and rand weakness are worsening inflation risks. Fuel inflation is expected above 18% in the second quarter, increasing financing costs, pressuring consumer demand, and complicating capital allocation and import-dependent operations.
Tax and Compliance Burdens Rise
From April 2026, businesses face wider digital tax reporting, higher dividend tax rates, changed business-property relief, and new business-rates structures. Compliance costs will rise, especially for SMEs and owner-managed firms, affecting cash flow, succession planning, investment timing and corporate structuring.
China Controls and Tech Enforcement
Washington is tightening and unevenly enforcing export controls on advanced semiconductors and AI hardware, while diversion cases through Southeast Asia expose compliance weaknesses. For multinationals, this raises legal, reputational, and operational risks across electronics supply chains, especially for China-linked sales, procurement, and R&D partnerships.
US Tariff And Probe Exposure
Washington’s tariff stance remains the top external risk: Trump threatened tariffs of 25% from 15%, while USTR Section 301 probes on overcapacity and forced labor could hit autos, semiconductors and other exports, complicating pricing, contracts and market access planning.
Arctic Infrastructure and Resource Access
A federal northern package of about C$35 billion will expand military and civilian infrastructure, including roads, airports and a deepwater Arctic port corridor. Beyond security, the plan could materially improve access to strategic mineral deposits, logistics networks and long-term project viability.
Reconstruction Finance Still Conditional
International capital is available for Ukraine’s recovery, but large-scale foreign investment still depends on durable security, continued reforms and de-risking tools. The EBRD invested €2.9 billion last year, yet investors remain cautious pending stability, stronger governance, and clearer postwar conditions.
Escalating War Disrupts Commerce
Ongoing U.S.-Israel-Iran conflict has damaged confidence, interrupted trade flows, and increased operational volatility across banking, ports, logistics, and energy markets. Reported strikes on Kharg-linked infrastructure and vessel attacks heighten force majeure, personnel safety, and business continuity risks.
Supply Chain Diversification Opportunity
Thailand’s manufacturing base and location position it to capture supply-chain diversification from global tensions, especially in electronics and industrial exports, but success depends on regulatory reform, competitiveness upgrades, and sustained political stability to convert interest into FDI.
US-China Decoupling Deepens Further
Direct US-China goods trade continues to contract, with the 2025 bilateral goods deficit down 32% to $202.1 billion and China’s share of US imports near 7%. Trade is rerouting via Mexico, Taiwan, and Southeast Asia, raising compliance and transshipment risks.
Asia Pivot and Capacity Limits
Russia is redirecting trade toward China and other Asian buyers, but eastern pipeline and port routes remain capacity-constrained. Existing channels handle roughly 1.9 million barrels per day, limiting substitution for western disruptions and creating bottlenecks that affect exporters, commodity traders and supply-chain reliability.
Battery Supply Chain Realignment
U.S. defense decoupling from Chinese batteries is opening opportunities for Korean producers such as Samsung SDI, LG Energy Solution and SK On. For investors, this creates new long-term demand streams beyond EVs, especially in standardized defense and aerospace applications.
Renewables Expansion and Grid Upgrades
Egypt moved its renewable-energy target to 45% by 2028 and plans grid upgrades costing EGP 160 billion. Large wind and power-link projects improve long-term energy resilience, open infrastructure opportunities, and support lower fuel dependence for industrial investors.
Energy Shock Hits Industry
Middle East disruption and constrained Hormuz shipping have reignited Germany’s energy crisis, with crude nearing $120 and TTF gas briefly above €71/MWh. High power costs, low gas storage, and possible coal reactivation threaten margins, production continuity, and investment planning.
Labour Shortages Constrain Operations
Mobilisation, migration and wartime disruption continue to tighten Ukraine’s labour market. International businesses already operating there face hiring and retention difficulties, while lenders and development institutions are funding re-skilling, productivity upgrades and distributed energy solutions to sustain output.
Logistics disruptions raise trade costs
Conflict-driven shipping dislocation is increasing freight charges, rerouting, congestion, and transit times for Indian exporters. Agriculture, chemicals, petroleum products, textiles, and engineering goods are particularly exposed, making logistics resilience, alternative ports, and inventory planning more important for international operators.