Mortgage stress and domestic demand

CMHC flags rising mortgage stress in Toronto and Vancouver; over 1.5M households have renewed at higher rates and another ~1M face renewal soon. A consumer slowdown could weaken retail, construction, and SME credit demand, while increasing counterparty and portfolio risk.

AUKUS and Indo-Pacific Security Dynamics

Australia’s deepening defense ties with the US and UK through AUKUS reinforce its strategic role in the Indo-Pacific. This alliance supports supply chain security and regional stability, but also increases expectations for Australia’s defense spending and self-reliance amid rising China-US competition.

Industrial policy reshapes investment maps

CHIPS, IRA, and related subsidy programs are steering manufacturing and energy investment into the U.S., but with strict domestic-content and “foreign entity of concern” limits. Multinationals must align capex, JV structures, and supplier qualification to retain incentives and avoid clawbacks.

Technology Sector Volatility and AI Investment

Major US tech firms are ramping up AI investments, but market performance is diverging due to supply chain disruptions and tariff uncertainty. Long-term AI adoption promises sectoral transformation, yet near-term volatility affects global tech partnerships and investment strategies.

EV supply-chain localization rules

Proposed “100% US-made” requirements for federally funded EV chargers would effectively stall parts of the build-out, given reliance on imported power modules and electronics. This raises uncertainty for EV infrastructure investors, equipment suppliers, and downstream fleet electrification plans.

Energy transition meets grid constraints

Renewables are growing rapidly, yet Brazil curtailed roughly 20% of wind/solar output in 2025 with estimated losses around BRL 6.5bn, reflecting grid bottlenecks. Investors must factor transmission availability, curtailment clauses and regulatory responses into projects and PPAs.

Human Rights, Sanctions, and Diplomacy

China’s use of sanctions in response to foreign criticism—especially on human rights—remains a diplomatic lever. Recent lifting of sanctions on UK politicians signals selective engagement, but ongoing concerns over governance and rights continue to affect reputational and operational risks.

Aggressive US Industrial and Tariff Policy

Sweeping tariffs, export controls, and industrial subsidies under the Trump administration aim to boost domestic manufacturing and reduce trade deficits. These measures raise input costs, provoke foreign retaliation, and complicate cross-border investment and supply chain management for global firms.

Energy Policy and Power Grid Strain

Explosive AI-driven demand is straining the US power grid, prompting urgent investment in nuclear and grid infrastructure. Regulatory reforms and public-private partnerships are accelerating, but energy reliability and cost volatility will remain key concerns for industrial and tech sectors.

Mobilization-driven labour and HR risk

Ongoing mobilization and enforcement practices tighten labour supply and raise HR compliance and reputational risks for employers. Firms face higher wage pressure, absenteeism, and operational continuity challenges, while needing robust documentation for exemptions/critical-worker status and strengthened duty-of-care in high-stress environments.

Semiconductor Sector Faces US Pressure

The US is leveraging tariffs and investment incentives to push Korean semiconductor giants like Samsung and SK hynix to expand US-based production. This industrial policy shift could reshape global supply chains, affect Korea’s tech leadership, and increase operational costs for Korean firms.

Environmental licensing and ESG exposure

Congressional disputes over environmental licensing reforms and tighter deforestation scrutiny are increasing permitting uncertainty for infrastructure, mining and agribusiness. Exporters face rising compliance demands—especially linked to deforestation-free requirements—raising audit, traceability and contract-risk costs across supply chains.

Industrial tariffs and beneficiation policy

Eskom is proposing interim discounted electricity pricing for ferrochrome (e.g., 87c/kWh) and extensions of take-or-pay relief, as smelters struggle with power costs. Such interventions signal ongoing policy activism around beneficiation, affecting mining-linked investors’ cost curves and offtake planning.

Federal Reserve Policy and Political Pressures

The Federal Reserve has paused rate cuts, holding at 3.5-3.75%, amid robust GDP growth and persistent inflation. Political interference, including Supreme Court cases and leadership uncertainty, threatens Fed independence, influencing monetary policy outlook and global investor confidence.

ESG and Sustainability Regulatory Momentum

Taiwanese financial and industrial sectors are accelerating ESG adoption, with new SBTi-aligned targets, green energy integration, and supply chain decarbonization. Firms face growing expectations for emissions reduction, sustainable finance, and supply chain transparency.

US-Taiwan Strategic Economic Partnership

Recent agreements deepen US-Taiwan cooperation in AI, advanced technology, and drones, with reduced tariffs and joint supply chain security initiatives. This partnership strengthens Taiwan’s global economic relevance but also draws criticism and countermeasures from China.

Investment security screening expands

CFIUS scrutiny and emerging outbound-investment controls increase deal uncertainty in sensitive sectors like semiconductors, AI and advanced manufacturing. Cross-border M&A may require longer timelines, mitigation agreements, or abandonment; investors need earlier national-security due diligence and structural protections.

Strategic stockpiles and resilience push

Japan’s government and industry continue building resilience via stockpiling, diversification, and domestic capability in materials and energy, accelerated by global geo-economic fragmentation. Businesses should anticipate subsidies tied to reshoring, stricter supply-chain transparency, and contingency planning expectations.

Sovereign Wealth Fund and State Intervention

The Danantara sovereign wealth fund, managing $1 trillion in assets, is central to President Prabowo’s industrialization and investment agenda. While intended to boost efficiency and co-investment, increased state involvement and leadership changes have raised questions about governance, fiscal discipline, and market independence.

Infrastructure Investment Spurs Opportunities

Major federal investments under the Infrastructure Investment and Jobs Act are modernizing US transportation, energy, and digital networks. These initiatives create significant opportunities for construction, technology, and green energy sectors, while also improving long-term supply chain efficiency.

Major Overhaul of Investment Laws

Thailand is implementing sweeping reforms to business, visa, and property regulations, including opening select sectors to 100% foreign ownership, easing expat entry, and legalizing same-sex marriage. These measures aim to attract global talent and investment, boosting Thailand’s competitiveness as an international business hub.

Expansion of Battery Recycling Infrastructure

Significant investments are underway in France to expand battery recycling and reconditioning facilities. Projects like Weeecycling and new reconditioning centers will boost capacity, create jobs, and support circular economy goals, directly impacting supply chains and operational costs.

Critical minerals bloc and rare-earth strategy

South Korea chairs the US-led FORGE initiative while also building a China hotline and joint committee to stabilize rare-earth imports. Policy includes easing public-sector overseas resource limits and funding mine access, reshaping sourcing, compliance, and procurement for EVs, chips, and defense.

Water security and municipal failures

Urban and industrial water reliability is deteriorating amid aging infrastructure and governance gaps. Non-revenue water is about 47.4% (leaks ~40.8%); the rehabilitation backlog is estimated near R400bn versus a ~R26bn 2025/26 budget, disrupting production, hygiene, and workforce continuity.

Macroeconomic rebound with fiscal strain

IMF projects Israel could grow about 4.8% in 2026 if the ceasefire holds, driven by delayed consumption and investment. However, war-related debt, defense spending and labor constraints pressure fiscal consolidation, influencing taxation, public procurement priorities, and sovereign risk pricing.

Climate Policy and Infrastructure Investment Uncertainty

US climate and infrastructure policy shifts, including reversals of clean energy initiatives, create uncertainty for global investors. Geopolitical competition over infrastructure standards and data systems is intensifying, impacting long-term planning for sustainable business operations.

Supply chain resilience and port logistics risk

Australia’s trade-dependent sectors remain sensitive to shipping availability, port capacity and industrial relations disruptions. Any bottlenecks can raise landed costs and inventory buffers, particularly for LNG, minerals and agribusiness. Firms are prioritising diversification, nearshoring and stronger contingency planning.

Gas and LNG project constraints

New EU measures include bans on maintenance and services for LNG tankers and icebreakers, tightening pressure on Russian LNG export projects and Arctic logistics. This increases delivery uncertainty, reduces long‑term offtake reliability, and complicates energy‑intensive investments.

China trade ties and coercion

China remains Australia’s dominant trading partner, but flashpoints—such as Beijing’s warnings over the Chinese-held Darwin Port lease and prior export controls on inputs like gallium—keep coercion risk elevated, complicating contract certainty, market access, and contingency planning for exporters and import-dependent firms.

Trade Policy Uncertainty and Diversification

US tariffs (currently 19%) and global trade tensions are prompting Thailand to diversify export markets beyond the US and China. Efforts to expand FTAs, streamline certification, and access India and the Middle East are central to trade resilience and supply chain adaptation.

Eastern Economic Corridor Infrastructure Push

Thailand is accelerating infrastructure megaprojects in the Eastern Economic Corridor, including the U-Tapao Airport City PPP and a proposed Disneyland-style complex. These initiatives are designed to attract FDI, boost tourism, and create a high-tech industrial hub, but require policy continuity and investor confidence.

Alliance rebalancing and security posture

US strategy signals greater Korean responsibility for deterring North Korea, with discussions on wartime OPCON transfer and cooperation on nuclear-powered submarines. A shifting force posture can affect political risk perceptions, defense procurement, technology transfer, and resilience planning for firms operating in Korea.

UK-EU Relations and Strategic Realignment

Brexit’s legacy continues to shape UK-EU cooperation. Recent US protectionism and security concerns are prompting renewed dialogue and potential closer alignment, as both sides seek stability and leverage in an increasingly fragmented global trading system.

Nuclear talks, snapback uncertainty

Iran–US nuclear diplomacy restarted via Oman/Türkiye but remains fragile, with disputes over uranium enrichment, missiles and scope. Missing highly enriched uranium and IAEA scrutiny sustain “snapback”/renewed UN measures risk, complicating long-term investment and trade planning.

Allied defence-industrial deepening (AUKUS)

AUKUS-related procurement and wider defence modernisation continue to reshape industrial partnerships, technology controls and security vetting. Suppliers in shipbuilding, cyber, advanced manufacturing and dual-use tech may see growth, but face stricter export controls, sovereignty requirements and compliance burdens.

US-Australia Strategic Minerals Partnership

Australia and the US have deepened cooperation on critical minerals, with multi-billion-dollar funding and joint ventures. This partnership supports supply chain diversification for Western industries, boosts investment opportunities, and reduces exposure to geopolitical shocks from China.