Mission Grey Daily Brief - November 19, 2024
Summary of the Global Situation for Businesses and Investors
The 1,000th day of the Russia-Ukraine war has been marked by a major escalation as Ukraine fired US-made ATACMS missiles into Russia's Bryansk region, just two days after the Biden administration gave Kyiv the green light to use the longer-range American weapons against targets inside Russia. This comes as the US ramps up financial, military, and diplomatic support for Kyiv and pushes for the "strongest possible" language on Ukraine at the G20 summit in Rio de Janeiro. Meanwhile, the US is also setting its sights on Malaysia and Indonesia to normalise ties with Israel following the collapse of the Abraham Accords. In other news, a Chinese citizen was killed and five others, including four Chinese nationals, were injured in a cross-border attack from Afghanistan targeting the Shamsiddin Shohin district of Tajikistan.
Russia-Ukraine War Escalates
The Russia-Ukraine war has reached its 1,000th day, with Ukraine firing US-made ATACMS missiles into Russia's Bryansk region, just two days after the Biden administration gave Kyiv the green light to use the longer-range American weapons against targets inside Russia. This marks a major escalation in the conflict, as Kyiv has wasted little time in making use of its newly-granted powers. The attack on the Bryansk facility comes as Russia is probing on the frontlines in Ukraine's east while pummeling its cities with missile and drone strikes, aiming to disable Ukraine's power grid and weaponize the freezing temperatures for a third consecutive winter.
The war has displaced millions of Ukrainians and resulted in the deaths and injuries of hundreds of thousands of civilians and soldiers. It has also brought significant changes to life in Russia, as the country is the world's most sanctioned state, mostly imposed from the West. Big companies like McDonalds, Apple, and Starbucks have left the country, leaving it to pivot to new markets and trade partners, often in China.
The US is ramping up financial, military, and diplomatic support for Kyiv and pushing for the "strongest possible" language on Ukraine at the G20 summit in Rio de Janeiro. Western diplomats have renewed their push for stronger criticism on Moscow following Russia's weekend airstrike, its largest on Ukrainian territory in months. They have also warned that increased Russian war efforts could have a destabilizing effect beyond Europe.
US Sets Sights on Malaysia and Indonesia to Normalise Ties with Israel
Following the collapse of the Abraham Accords, the US is setting its sights on Malaysia and Indonesia to normalise ties with Israel. The Abraham Accords are US-sponsored bilateral agreements on the normalisation of relations between Arab states and Israel. The project has so far established diplomatic relations and Israeli embassies in the United Arab Emirates, Morocco, Sudan, and Bahrain, the latter of which has recalled its ambassador in protest at Israel's war on Gaza.
The plan was to get major Arab states to normalise their relations with Israel, particularly Saudi Arabia, home to Islam's two holiest sites, which Washington hoped would spur other neighbouring states as well as Muslim governments around the world to follow suit. However, the plan failed after Hamas's October 7 attacks across the borders of Gaza, followed by a US-backed military campaign in Gaza that has devastated Palestinian lives and killed more than 50,000 civilians, mostly women and children.
This time, the US is approaching Muslim countries such as Malaysia and Indonesia, which are seen as the most US-friendly in recent decades. The hope is that Israel will finally get the diplomatic breakthrough it has so long craved in this part of the world. However, there are concerns that the US may use leverage on trade to twist arms and make the normalisation of relations with Israel one of the conditions for US investment in Malaysia.
G20 Summit in Rio de Janeiro
The G20 summit in Rio de Janeiro has been met with protests from pro-Palestinian activists, who are denouncing the "genocide" in Gaza and the support for Israel by the G20 countries. The G20 summit is expected to discuss trade, sustainable development, health, agriculture, energy, the environment, and more during the meeting.
Chinese Citizen Killed in Cross-Border Attack from Afghanistan
A Chinese citizen was killed and five others, including four Chinese nationals, were injured in a cross-border attack from Afghanistan targeting the Shamsiddin Shohin district of Tajikistan. The motive for the incident remains unclear, and the identities of the attackers have not been confirmed. It is not yet known whether they were drug traffickers or members of an extremist group, both of which are active along the Afghanistan-Tajikistan border.
The Chinese nationals were working at a gold mine in the Zarafshan Gorge area of Shamsiddin Shohin. This is the first recorded attack on Chinese citizens in this unstable border region of Tajikistan. The escalation of attacks on Chinese citizens in the region, including in Pakistan's Balochistan and Khyber Pakhtunkhwa, poses significant threats to ongoing mega-projects like the China-Pakistan Economic Corridor (CPEC).
Targeted assaults on Chinese nationals and infrastructure have created hurdles for the multi-billion-dollar initiative, intensifying security concerns for all stakeholders. These incidents underscore the broader instability affecting regional development projects and highlight the need for robust security measures and enhanced regional cooperation to safeguard investments and address the root causes of violence and unrest.
Further Reading:
1,000 days since Russia invaded Ukraine. And, Trump's proposed plan for your money - NPR
Cracks in G20 consensus over Ukraine as US ramps up aid - VOA Asia
Ukraine fires US-made longer-range missiles into Russia for the first time - CNN
Themes around the World:
Climate Change and Green Growth Opportunities
Thailand faces significant climate risks potentially reducing GDP by up to 14% by 2050 due to floods, droughts, and coastal erosion. The World Bank emphasizes climate-smart investments, carbon pricing, and green technology exports as pathways to sustainable growth, enhanced competitiveness, and attracting low-carbon economy investments.
Inflation and Monetary Policy Outlook
UK inflation remains steady at 3.8%, below forecasts, fueling expectations of Bank of England rate cuts. Softer inflation supports market rallies in financials and housebuilders but inflation still exceeds the BoE's 2% target. Monetary policy decisions will influence borrowing costs, consumer spending, and investment, impacting overall economic growth and market stability.
Resistance Economy and Domestic Adaptation
In response to sanctions, Iran pursues a 'resistance economy' focused on self-sufficiency, domestic production, and trade with non-Western partners like China and Russia. While this strategy aims to mitigate external pressures, structural vulnerabilities and limited market access constrain its effectiveness, impacting long-term economic resilience and foreign trade opportunities.
US Treasury Holdings and Monetary Strategy
Saudi Arabia's management of US Treasury holdings, fluctuating between $120 billion and $140 billion, reflects strategic liquidity management to support the riyal-dollar peg and external payment obligations. This disciplined approach balances safety, liquidity, and yield, underpinning financial stability amid oil revenue cycles and fiscal demands.
Financial Market Bubble and Crisis Risks
South Korea's stock market surge, driven by AI and tech optimism, parallels historical bubbles but faces vulnerabilities from high household debt, inflated real estate, and external shocks. Weakening financial oversight and global uncertainties increase the risk of a financial crisis within five years, necessitating stronger safeguards and policy coherence to maintain investor trust and economic stability.
Currency Volatility and Yen Weakness
The Japanese yen has weakened to multi-decade lows against the US dollar amid expectations of continued fiscal stimulus and dovish monetary policy under Takaichi's administration. This depreciation enhances export competitiveness but raises concerns about inflationary pressures, fiscal sustainability, and potential market volatility, impacting trade dynamics and foreign investment flows.
US Dollar Volatility and Global Impact
Bank of America warns of two-way risks for the US dollar amid uncertain Federal Reserve policies, global economic health, and geopolitical tensions. Dollar fluctuations affect trade competitiveness, investment flows, and inflation, complicating strategic planning for multinational corporations and investors reliant on dollar-denominated assets.
Impact of Internet Blackouts on Digital Economy
Government-imposed mobile internet suspensions during protests halt digital services, crippling gig economy workers and IT freelancers who rely on connectivity for income. Telecom operators and the government also suffer revenue losses, highlighting the broader economic cost of digital disruptions.
Border Trade Disruptions with Afghanistan
Frequent closures at key border points like Torkham severely impact bilateral trade, stranding thousands of trucks and causing multi-million dollar losses. This disrupts supply chains for essential goods, undermines local economies, and threatens the transport and customs sectors critical for regional commerce.
Ukraine's Long-Range Military Strikes on Russian Energy
Ukraine's strategic long-range strikes on Russian oil refineries and gas processing facilities aim to cripple Russia's energy revenue, a critical war funding source. These attacks disrupt production, cause fuel shortages in Russia, and increase geopolitical tensions, influencing global energy markets and prolonging conflict-related uncertainties for investors and supply chains.
Challenges Facing German Logistics Sector
The German logistics industry anticipates minimal growth in 2026 amid economic and geopolitical uncertainties. Increased cyberattack risks necessitate higher IT investments, while firms seek efficiency gains through automation and AI. These pressures complicate supply chain management and may constrain logistics capacity, impacting trade and distribution networks.
Global Ripple Effects of Ukraine Conflict
The war in Ukraine has far-reaching impacts beyond Europe, influencing geopolitical alignments, trade relations, and security policies across Asia, the Middle East, Africa, and Latin America. These shifts affect global investment flows, supply chains, and international cooperation frameworks.
Cyber Insurance Market Growth
The cyber insurance market in Vietnam is expanding swiftly due to rising cyberattack incidents and stringent data protection regulations. Increasing digital adoption across sectors drives demand for comprehensive cyber risk coverage, especially in banking, finance, and e-commerce, highlighting the growing importance of cybersecurity in corporate risk management.
Manufacturing Sector Growth and Export Challenges
Indonesia’s manufacturing industry grew 4.94% with a 17.24% GDP contribution, driven by domestic demand and investment. However, export values lag behind regional peers due to a focus on the domestic market. This presents both opportunities for import substitution and challenges in enhancing global competitiveness amid shifting supply chains.
Emerging Global Economic Powerhouse
Vietnam is projected to become one of the world's 30 largest economies by 2025 with a GDP exceeding $505 billion. Key sectors like textiles, electronics, and food processing have gained international competitiveness, contributing to a diversified industrial ecosystem. However, reliance on imported raw materials remains high, prompting efforts to increase localization and supply chain resilience to sustain growth and global market integration.
Iran's Resistance Economy and Self-Reliance
Facing chronic sanctions, Iran has developed a 'resistance economy' emphasizing self-sufficiency, indigenous technological development, and alternative financial channels. This strategy has fostered domestic innovation in sectors like pharmaceuticals and defense, reducing dependence on Western imports but also limiting integration with global markets.
Government Industrial Policy and Protectionism Risks
The Albanese government’s increased subsidies and manufacturing support reflect a shift towards industrial policy, raising concerns about fiscal costs and resource misallocation. The IMF warns such interventions may not yield economic gains and could detract from more productive sectors. Businesses and investors face uncertainties regarding policy direction, regulatory environment, and market competitiveness.
Cybersecurity Vulnerabilities in Business Infrastructure
Weak infrastructure and skills shortages expose South African firms to increasing cyberattacks, threatening data security and operational continuity. High ransomware and infostealer incidents target critical sectors, including government agencies. Cyber risks undermine investor confidence and disrupt supply chains, necessitating urgent investment in cybersecurity and regulatory compliance to protect economic stability.
High Energy Costs and Industrial Competitiveness
Pakistan’s industrial sector faces disproportionately high electricity tariffs driven by costly capacity payments to Independent Power Producers. These elevated energy costs reduce competitiveness relative to regional peers, increase production expenses, and deter manufacturing expansion and export diversification.
Agricultural Expansion and Commodity Markets
Brazil is set for record planting in the 2025/26 season, particularly in soybeans and corn, reinforcing its status as a global agricultural powerhouse. Despite tight profit margins, increased acreage and production volumes may pressure global commodity prices, impacting export revenues and supply chain dynamics in food and biofuel sectors.
Inflation and Monetary Policy
Mexico's inflation rate rose slightly to 3.76% in September 2025, remaining within the central bank's target range. Banxico has implemented a series of interest rate cuts, lowering the benchmark rate to 7.50%, with expectations of further reductions. This monetary easing aims to support economic activity amid sluggish growth but poses challenges in managing inflationary pressures and investor expectations.
Fiscal Challenges and Market Pressure
Brazil faces mounting fiscal pressures and public debt concerns, impacting investor confidence and market stability. Political efforts to raise revenue amid global uncertainties create volatility in financial markets, influencing borrowing costs and investment decisions. This environment necessitates cautious fiscal management to sustain economic growth and maintain Brazil's attractiveness for international trade and investment.
Political Paralysis and Strategic Inaction
The Iranian government exhibits systemic paralysis, failing to restart nuclear negotiations or prepare adequately for potential conflicts with Israel and the US. Supreme Leader Khamenei’s policy of 'strategic patience' has shifted to inaction, undermining governance capacity and increasing uncertainty for international investors and trade partners.
Impact of US Sanctions on Russia and Energy Markets
US sanctions targeting Russian oil giants Lukoil and Rosneft have tightened global energy markets, raising oil prices and inflationary pressures. These measures disrupt Russian fiscal revenues and complicate military funding, while influencing global commodity flows and central bank policies, thereby affecting international trade and investment landscapes.
Enhanced Financial Crime Enforcement Powers
Legislation is underway to grant Turkey's Financial Crimes Investigation Board (MASAK) immediate authority to freeze bank accounts linked to suspicious transactions. While aimed at combating money laundering and corruption, this move raises concerns about potential government overreach and selective enforcement, affecting business confidence and private sector autonomy.
Investor Sentiment and Sector Preferences
Foreign and domestic investors remain optimistic about Brazil but adjust sector exposures, favoring financial and defensive stocks over interest-rate sensitive and commodity sectors. Differences in portfolio concentration and risk appetite reflect cautious optimism amid political and fiscal uncertainties, influencing capital flows and market dynamics.
South Korea-Germany Trade and Investment Ties
Germany views South Korea as a strategic trade ally to diversify away from China, focusing on automotive, pharmaceuticals, and chemicals sectors. Both countries collaborate on e-mobility and hydrogen technologies, with significant German investments in Korea, underscoring mutual interests in economic security and industrial supply chain resilience.
US Dollar Strength and Sterling Volatility
The US Dollar's recent strength, driven by Federal Reserve rate hikes and safe-haven demand, has pressured the British Pound, which faces volatility amid persistent UK inflation and growth concerns. This currency dynamic affects import costs, export competitiveness, and cross-border investment strategies, complicating financial planning for UK businesses.
Rising Borrowing Costs and Debt Servicing Pressure
Increasing interest rates have pushed up borrowing costs for the French government, households, and businesses. Higher debt servicing diverts funds from critical areas like defense and green transition initiatives, constraining public investment and economic growth prospects. This dynamic exacerbates fiscal pressures and could dampen domestic consumption and investment.
Market Sentiment Shift to Defensive Stocks
Following global trade tensions and credit concerns, UK investors are favoring defensive sectors such as consumer goods, pharmaceuticals, and utilities over growth stocks. This rotation reflects caution amid economic uncertainty, influencing capital allocation, stock valuations, and sectoral performance.
U.S.-Indonesia Economic and Trade Relations
At the 47th ASEAN Summit, Indonesia emphasized expanding economic cooperation with the U.S., focusing on investments in nickel refining, semiconductors, AI, renewable energy, and nuclear technology. Strengthening supply chains and sustainable investments reflects Indonesia's strategic positioning to attract U.S. capital and technology, enhancing bilateral trade and regional economic integration.
Foreign Investment Trends and Stock Market Dynamics
Foreign net purchases of South Korean stocks have surged, particularly in the semiconductor sector, reflecting optimism about industry prospects. However, foreign investors remain cautious due to geopolitical risks and regulatory uncertainties, influencing capital market volatility and investment strategies.
Geopolitical Ripple Effects of Ukraine Conflict
The war in Ukraine has global repercussions, affecting trade relations, alliances, and economic policies beyond Europe, including East Asia, the Middle East, Africa, and Latin America. These shifts influence international investment strategies, supply chain configurations, and geopolitical risk assessments for businesses operating in or with Ukraine and its partners.
Manufacturing Sector Growth and Export Challenges
The manufacturing industry grew by 4.94% from Q4 2024 to Q2 2025, contributing 17.24% to GDP and employing 19.44 million workers. Despite positive domestic demand, exports lag behind regional peers due to weak foreign demand and production declines. The sector remains vital but faces challenges in boosting competitiveness and expanding export markets.
Canada's Export Diversification Strategy
Prime Minister Mark Carney emphasizes reducing economic dependence on the U.S. by doubling exports to non-U.S. markets, particularly in natural gas and critical minerals. This strategic pivot aims to mitigate risks from U.S. tariffs and trade policies, fostering new trade partnerships in Asia and beyond to enhance economic resilience.
Economic Policy and Reform Challenges
Despite a €500 billion investment fund and debt policy easing, Germany's economic recovery is hindered by political gridlock, resistance to social welfare reforms, and ineffective stimulus measures. The lack of comprehensive structural reforms threatens prolonged stagnation, with calls for pension system overhaul and deregulation to revitalize growth and fiscal sustainability.