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Mission Grey Daily Brief - November 18, 2024

Summary of the Global Situation for Businesses and Investors

The G20 summit in Brazil is overshadowed by two major wars and Donald Trump's recent election victory. Heightened global tensions and uncertainty about an incoming Trump administration have tempered any expectations for a strongly worded statement addressing the conflicts in the Middle East and between Russia and Ukraine. Experts instead anticipate a final document focused on social issues like the eradication of hunger — one of Brazil's priorities — even if it aims to include at least a mention of the ongoing wars.

Typhoons in the Philippines have caused tidal surges and displaced massive numbers of people.

Geopolitical tensions simmer as Cop29 heads into its second week in Baku, Azerbaijan. Climate advocates are urging world leaders to commit to a strong finance deal.

Japan and Ukraine have signed a security info-sharing pact to boost cooperation.

Russia-Ukraine War

The Russia-Ukraine war has dragged past its thousandth day, with hundreds of missiles and drones streaking across Kyiv's skies, killing at least two people, leaving a dozen more injured, and damaging the country's already beleaguered energy grid. Russia's relentless aerial bombardment has destroyed half of Ukraine's energy production capacity, according to President Volodymyr Zelensky.

With the harsh Ukrainian winter fast approaching, the country is already suffering from major energy shortfalls, while its outmanned and outgunned forces have been steadily ceding ground to the Kremlin's troops for weeks. Kyiv has implored its Western allies for help to rebuild its energy grid — a hugely expensive undertaking — and to supply its outgunned forces with more aerial defence weapons.

Many in Ukraine fear that Western help will not be as freely given following the imminent return of Trump to the White House in January. The Republican president-elect has frequently questioned the United States' backing for Ukraine, and campaigned with the promise of cutting a quick deal to end the war.

Joe Biden has authorised Ukraine’s use of long-range missiles to strike hundreds of miles inside Russia for the first time, according to reports. The decision marks a major policy shift and comes after Russia warned that Moscow would see the move to allow the use of US-made missiles as an “escalation.” With Biden leaving office in two months, president-elect Donald Trump has indicated he will limit American support for Ukraine and pledged to end the war quickly once he takes office in January.

Ukrainian President Volodymyr Zelensky has campaigned for months to allow Ukraine’s military to use US weapons to hit Russian military targets far from its border, and retains important allies in both parties in Congress. He said Sunday evening that the strikes, if carried out, would "speak for themselves." But he did not confirm the authorization directly.

The Kremlin has said that if the United States allowed Ukraine to use US-made weapons to strike far into Russia, it would lead to a rise in tension and deepen the involvement of the United States in the conflict.

North Korea's Involvement in the Russia-Ukraine War

North Korea may end up sending Putin 100,000 troops for his war, according to people familiar with assessments made by some Group of 20 nations. The analysis is one of several on the evolving partnership between Russian President Vladimir Putin and North Korean leader Kim Jong Un, said the people, speaking on condition of anonymity to talk about private discussions. They stressed that such a move wasn’t imminent and that military support at that scale — if it occurred — would likely happen in batches with troops rotating over time rather than in a single deployment.

Ukraine’s ambassador to South Korea made a similar assessment earlier this month. Dmytro Ponomarenko said in an interview with VOA that Kyiv expected up to 15,000 North Korean troops deployed to fight in Russia’s Kursk region – and possibly in occupied areas of eastern Ukraine – to rotate every few months.

Kim’s decision to send North Korean troops to join Russia’s fight against Ukraine has alarmed Kyiv’s allies, who’ve warned that it risks exacerbating what is already Europe’s largest conflict since World War II. They believe the deepening cooperation between Putin and Kim could also impact the security balance in the Indo-Pacific region, where there’s mounting rivalry between China and the US.

The issue will be raised by several allies at the G-20 Summit in Brazil this week including by German Chancellor Olaf Scholz when he meets Chinese President Xi Jinping, Bloomberg previously reported. Scholz told Putin Friday in a rare phone call that the deployment of North Korean troops was a “grave escalation” of the war against Ukraine.

Scholz will press the Chinese leader at their meeting in Rio on Tuesday to use his influence over Russia and North Korea to avoid further escalation in the war, according to German officials.

The North Korean deployment shows the war is becoming globalized and Scholz and Xi will need to discuss this new dimension of the conflict, the officials said.

Worries were also raised by allies at the APEC gathering in Lima, Peru, this past week, another person said.

Xi has been the biggest benefactor to Putin and Kim in recent years, and sees both leaders as partners in pushing against the US-led world order. But his government has remained silent publicly on the dispatch of North Korean troops to Russia — a sign the Chinese president may be unhappy with the arrangement.

The Kim-Putin partnership risks adding economic pressure on China, just as Xi is bracing for potential disruption from tariffs threatened by US President-elect Donald Trump when he returns to the White House. It also undermines Beijing’s argument that the US shouldn’t have military alliances in the Indo-Pacific region.

China doesn’t “allow conflict and turmoil to happen on the Korean Peninsula” and it won’t “sit idly by when its strategic security and core interests are under threat,” Xi told US President Joe Biden at talks Saturday on the sidelines of the Asia-Pacific Economic Cooperation summit in Lima.

North Korea has so far sent more than 10,000 troops to fight alongside Putin’s army in Russia’s Kursk region, where Ukrainian forces have occupied part of the border territory since a surprise incursion in August. In return, Russia is providing money and helping North Korea increase its capabilities.

South Korea has said there’s a “high chance” that North Korea will seek cutting-edge technology transfers from Russia — including technology related to tactical nuclear weapons, intercontinental ballistic missiles, reconnaissance satellites and ballistic missile submarines.

As well as manpower, North Korea has also sent millions of rounds of artillery ammunition and other weapons to Russia. The Financial Times reported this week, citing Ukrainian intelligence, that Pyongyang has supplied long-range rocket and artillery systems to Russia.

US-China Relations

China’s leader Xi Jinping met for the last time with President Biden on Saturday, but was already looking ahead to President-elect Donald Trump and his "America first" policies, saying Beijing "is ready to work with a new U.S. administration."

During their talks on the sidelines of the annual Asia-Pacific Economic Cooperation summit in Peru, Xi cautioned that a stable China-U.S. relationship was critical not only to the two nations but to the "future and destiny of humanity."

Without mentioning Trump’s name, Xi appeared to signal his concern that the incoming president’s protectionist rhetoric on the campaign trail could send the U.S.-China relationship into another valley.

"China is ready to work with a new U.S. administration to maintain communication, expand cooperation and manage differences so as to strive for a steady transition of the China-U.S. relationship for the benefit of the two peoples," Xi said through an interpreter.

Xi, who is firmly entrenched atop China’s political hierarchy, spoke forcefully in his brief remarks before reporters. Biden, who is winding down more than 50 years of public service, talked in broader brushstrokes about where the relationship between the two countries has gone.

He reflected not just on the past four years but on the decades the two have known each other.

"We haven’t always agreed, but our conversations have always been candid and always been frank. We’ve never kidded one another," Biden said. "These conversations prevent miscalculations, and they ensure the competition between our two countries will not veer into conflict."

Biden urged Xi to dissuade North Korea from further deepening its support for Russia’s war on Ukraine. The leaders, with top aides surrounding them, gathered around a long rectangle of tables in an expansive conference room at a Lima hotel.

They had much to discuss, including China’s indirect support for Russia, human rights issues, technology and Taiwan, the self-ruled democracy that Beijing claims as its own. On artificial intelligence, the two agreed on the need to maintain human control over the decision to use nuclear weapons and more broadly improve safety and international cooperation of the rapidly expanding technology.

There’s much uncertainty about what lies ahead in the U.S.-China relationship under Trump, who campaigned promising to levy 60% tariffs on Chinese imports.

Already, many American companies, including Nike and eyewear retailer Warby Parker, have been diversifying their sourcing away from China. Shoe brand Steve Madden says it plans to cut imports from China by as much as 45% next year.

In a congratulatory message to Trump after his victory over Vice President Kamala Harris, Xi called for the U.S. and China to manage their differences and get along in a new era. In front of cameras Saturday, Xi spoke to Biden — but it was unmistakable that his message was directed at Trump.

"In a major flourishing sci-tech revolution, neither decoupling nor supply chain disruption is a solution," Xi said. "Only mutual, beneficial cooperation can lead to common development. ‘Small yard, high fence’ is not what a major country should pursue."

Biden administration officials have said they would advise the Trump team that managing the intense competition with Beijing will likely be the most significant foreign policy challenge they will face.

On Saturday, White House national security adviser Jake Sullivan said Biden had reinforced to Xi "that these next two months are a time of transition" and that the president would like to pass off the U.S.-China relationship "in stable terms" to the new administration.

Biden has viewed his relationship with Xi as among the most consequential on the international stage and put much effort into cultivating it.

Trump's "America First" Policy

Trump's "America First" policy could shift the Horn of Africa policy and shake up Mideast diplomacy on Iran.

Trump's recent election victory and the imminent return of an America First doctrine may also hamper the diplomatic spirit needed for broad agreement on divisive issues at the G20 summit in Brazil.<co: 11>G20 summit in Brazil.</


Further Reading:

BREAKING NEWS: Japan, Ukraine sign security info-sharing pact to boost cooperation - Kyodo News Plus

Biden approves Ukraine’s use of long-range missiles inside Russia for first time - The Independent

Brazil hosts a G20 summit overshadowed by wars and Trump's return, aiming for a deal to fight hunger - ABC News

FirstFT: Biden authorises Ukraine to strike Russia with long-range US missiles - Financial Times

From Sudan to Ethiopia, Trump’s 'America First' priorities could shift Horn of Africa policy - Al-Monitor

Geopolitical tensions simmer as Cop29 heads into second week - The National

In a meeting with Biden, China's Xi cautions US to 'make the wise choice' to keep relations stable - Fox News

Latest typhoon lashes the Philippines, causing tidal surges and displacing massive numbers of people - Toronto Star

Live: Kremlin says US 'fuels' tensions by allowing Ukrainian missile strikes inside Russia - FRANCE 24 English

North Korea may end up sending Putin 100,000 troops for his war - Fortune

North Korea ‘supplying Russia’ with long-range rocket and artillery systems - Financial Times

Russia launches massive drone, missile attack targeting Ukraine’s power grid - FRANCE 24 English

Trump already shaking up Mideast diplomacy on Iran - Al-Monitor

Themes around the World:

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Energy Nationalism and Payment Stress

Mexico’s energy framework continues to favor Pemex and CFE, with permit delays, tighter fuel rules and more centralized regulation. U.S. authorities say Pemex still owes over $2.5 billion to American suppliers, raising counterparty, compliance and investment risks for energy-linked businesses.

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Energy Security Remains Fragile

Taiwan remains highly exposed to imported fuel disruption, with about 11 days of LNG stocks, roughly 49 days of coal and 100 days of oil. Heavy gas dependence threatens industrial continuity, power reliability and operating costs, especially under blockade or Middle East shipping stress.

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Manufacturing and Auto Sector Softness

Despite electronics resilience, broader industry is uneven: February manufacturing was flat year on year and down 2.1% month on month, while automotive output fell 1.3%. High appliance inventories and refinery maintenance signal patchy demand and capacity-planning challenges for suppliers.

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Yen Weakness and BOJ Tightening

The yen has hovered near ¥160 per dollar, raising imported input and energy costs. With policy rates already at 0.75% and markets pricing further tightening, companies face higher financing costs, pricing volatility and tougher hedging decisions.

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Energy Transition Investment Pipeline

Renewable investment is expanding and improving medium-term power resilience. Mulilo’s 337MW Middlepunt solar project reached financial close, with expected generation of 770 GWh annually under a 20-year agreement, reinforcing grid reform and opportunities in clean energy, storage and industrial power procurement.

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Renewables Expansion and Grid Upgrades

Egypt is accelerating its renewable target to 45% of the power mix by 2028, backed by around EGP 160 billion in grid upgrades and major wind projects. This creates opportunities in power, logistics, and local sourcing while gradually reducing fuel-import exposure.

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Route Congestion at Alternatives

As exporters divert cargoes away from Hormuz, substitute corridors and terminals are coming under strain. Saudi Arabia’s Yanbu system is nearing practical loading limits, with tanker queues and multi-day delays, showing that alternative infrastructure cannot fully absorb prolonged Gulf disruption.

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Tax reform execution risk

The dual-VAT transition is advancing, with IBS/CBS regulation expected shortly, but implementation remains costly and complex. Estimates suggest adaptation costs could reach R$3 trillion by 2033, forcing companies to overhaul ERP, invoicing, contracts, logistics, and tax compliance during a prolonged overlapping regime.

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Foreign investment gap persists

Saudi Arabia still needs substantially more foreign direct investment to fund diversification ambitions, yet inflows remain below expectations. Estimates cited annual needs near $100 billion, versus around $30 billion achieved in 2024, implying continued competition for capital and selective dealmaking opportunities.

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Electricity Market Reform Approaches

Ministers are considering reforms to weaken the link between gas and electricity prices, potentially moving older low-carbon assets to fixed-price contracts. Proposed changes could save £4-£10 billion annually, but also reshape power-sector returns, pricing and investment incentives.

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Vision 2030 project reassessment

Major Vision 2030 programs are being reviewed as war-related losses reportedly exceeded $10 billion. Flagship developments such as Neom and Sindalah have been scaled back or paused, potentially slowing construction demand, foreign participation, and long-term diversification opportunities.

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US-Taiwan Trade And Strategic Alignment

The new US-Taiwan Agreement on Reciprocal Trade would cut tariffs on up to 99% of goods while tightening export-control alignment. It should deepen bilateral investment and market access, but increases compliance burdens and constrains sensitive commercial engagement with China.

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Energy Shock Lifts Logistics

Middle East conflict and disruption around the Strait of Hormuz are pushing oil toward $100 per barrel, raising bunker fuel, diesel, and freight costs. U.S. ports report rerouting, surcharge pressure, and weaker import volumes, with broad inflationary spillovers for importers and exporters.

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Semiconductor Capacity and SEZs

India notified its first chip fabrication SEZ for Tata Semiconductor in Gujarat with planned investment of ₹91,000 crore and 21,000 jobs. Revised SEZ rules and additional approved projects for Micron and others improve long-term prospects for local chip packaging, testing, and import substitution.

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Energy Import Vulnerability And Costs

Taiwan’s heavy reliance on imported LNG and Middle Eastern oil exposes industry to geopolitical shocks. About one-third of LNG previously came from Qatar, while only 11 days of LNG reserves are onshore, pressuring power security, industrial costs, and inflation.

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Energy Shock and Import Costs

Turkey’s heavy energy import dependence leaves trade and industry exposed to Middle East disruption. Officials estimate a permanent 10% oil increase adds 1.1 percentage points to inflation, while a $10 rise worsens the annual energy balance by $3-5 billion.

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Surging shekel squeezes exporters

The shekel has strengthened to below NIS 3 per dollar for the first time since 1995, up more than 20% year on year. Cheaper imports help inflation, but exporters, manufacturers and tech firms face margin compression and relocation pressure.

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Insolvency wave hitting Mittelstand

Corporate distress is intensifying: Germany recorded 4,573 insolvencies in the first quarter, the highest since 2005 and above 2009 crisis levels. Construction, retail, and services are hardest hit, threatening subcontractors, credit conditions, and domestic distribution networks.

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Franco-European Defense Integration Deepens

France is accelerating joint European programs including SAMP/T NG air defense with Italy, while reassessing delayed projects such as the Franco-German tank and Eurodrone. For international suppliers, this means opportunities in European consortia but also procurement complexity and localization demands.

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Won Volatility and Outflows

The won weakened beyond 1,500 per dollar in late March, while average daily won-dollar trading hit a record $13.92 billion and foreign investors sold 35.9 trillion won in KOSPI shares. Currency volatility raises hedging costs, valuation uncertainty and import-price pressure.

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China Tech Controls Intensify

Bipartisan lawmakers proposed the MATCH Act to tighten semiconductor equipment export controls to China, including DUV tools and servicing. This would deepen U.S.-China technology decoupling, affect allied suppliers, and force multinationals to reassess semiconductor exposure, compliance, and China-linked production footprints.

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Monetary Tightening and Fiscal Pressure

UK businesses face a difficult macro backdrop of weaker growth, sticky inflation, and constrained fiscal support. Markets have swung on Bank of England rate expectations, while the IMF projects tax-to-GDP rising from 37.6% in 2024 to 42.1% by 2030.

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Reserve Depletion and Rating Risk

Central bank reserve losses and large-scale FX support have increased sovereign risk scrutiny. Fitch shifted Turkey’s outlook to Stable, citing more than $50 billion in intervention, creating implications for external financing costs, investor sentiment, and counterparty risk assessments.

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Industrial Land Constraints Tighten

Northern manufacturing hubs remain attractive but face rising industrial land scarcity and high occupancy. Bac Ninh alone has attracted over $46.8 billion in cumulative FDI, prompting expansion of next-generation industrial parks that will shape site selection, costs and speed-to-market for investors.

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Nickel Policy Tightens Further

Indonesia is raising nickel ore benchmark prices, considering export duties on processed products, and cutting 2026 output quotas to roughly 250–260 million tons from 379 million. This will reshape EV and stainless supply chains, raise smelter costs, and increase regulatory risk.

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US tariffs reshape exports

US trade barriers continue to hurt Brazilian exporters. March exports to the United States fell 9.1%, while first-quarter shipments dropped 18.7%, and roughly 22% of exports remain tariff-affected. Machinery makers also face 25% duties, pressuring margins, market access, and diversification strategies.

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Energy import shock escalation

Regional conflict has more than doubled Egypt’s monthly energy import bill to $2.5 billion in March from $1.2 billion in January, prompting fuel, gas and electricity price increases, threatening margins, industrial continuity, logistics costs and consumer demand across sectors.

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Strong Growth Faces External Shocks

Vietnam’s Q1 GDP grew 7.83%, but inflation reached 4.65% in March and external risks are intensifying. U.S. trade tensions, higher energy costs, and logistics disruption could squeeze manufacturers, weaken demand visibility, and complicate planning for investors and importers.

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Middle East Cost Shock

Conflict-linked disruption in oil and LNG markets is lifting Taiwan’s input, freight and utility costs. Manufacturing PMI stayed expansionary at 55.4, but supplier delivery times worsened and raw-material prices climbed near two-year highs, squeezing margins across industrial supply chains.

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Currency Stability Versus Hot Money

Recent inflows of $1.78 billion into government debt helped stabilize the pound, but much support still appears short term. Companies face ongoing exchange-rate risk, profit repatriation uncertainty, and exposure to sudden portfolio reversals if regional or global sentiment deteriorates.

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Symbolic OPEC+ output policy

OPEC+ approved a symbolic May quota rise of 206,000 barrels per day, but actual export gains remain limited by maritime disruption. For international firms, this means continued oil price volatility, uncertain feedstock costs, and unstable planning assumptions for energy-intensive operations.

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Renewables Policy Uncertainty Chills Investment

Planned reforms would remove compensation for new wind and solar projects in constrained grid areas, putting roughly €43-45 billion of investment at risk. The shift increases financing uncertainty, may delay capacity additions, and complicates site selection for energy-intensive international businesses.

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Macro Reforms and IMF

IMF-linked reforms remain the central business variable as Egypt weighs $1.5-3 billion in extra funding, targets a 6.1% fiscal deficit, and faces privatization demands. Reform execution will shape FX liquidity, taxation, subsidies, interest rates, and investor confidence.

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Inflation and Rate Sensitivity

Tariff-related price pressures and higher import costs are feeding U.S. inflation risks, even as growth remains positive. For international businesses, this raises uncertainty around Federal Reserve policy, financing conditions, consumer demand, and the viability of U.S.-focused inventory and pricing strategies.

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US-Taiwan Supply Chain Deepening

The United States became Taiwan’s largest trading partner in the first quarter for the first time in 25 years, while US imports from Taiwan rose US$59.6 billion last year. Deeper bilateral investment and trade integration is reshaping market access, compliance priorities and site-selection decisions.

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Metal and Industrial Tariff Spillovers

Possible U.S. revisions to steel and aluminum tariffs could apply duties to the full value of imported derivative goods, not only metal content. For Mexico’s deeply integrated automotive, machinery and appliance supply chains, that would materially raise landed costs and margin pressure.