Mission Grey Daily Brief - November 21, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains highly volatile, with escalating tensions between Russia and the West over the Ukraine conflict and Russia's nuclear threats dominating the headlines. The US decision to allow Ukraine to use long-range missiles has led to a heightened risk of nuclear escalation, with Russia warning of a potential nuclear response. Meanwhile, Myanmar has overtaken Syria as the country with the highest number of landmine casualties, highlighting the ongoing armed conflicts in countries with high poverty and interethnic inequalities. The Ukraine conflict and landmine crisis in Myanmar are likely to have significant implications for businesses and investors, with potential geopolitical and economic consequences.
Russia-Ukraine Conflict and Nuclear Threats
The Russia-Ukraine conflict has reached a critical juncture, with heightened tensions between Russia and the West over the US decision to allow Ukraine to use long-range missiles. Russia has warned of a potential nuclear response, with President Vladimir Putin lowering the threshold for a nuclear strike. This has led to increased tensions between Russia and the West, with Russia accusing the West of wanting to escalate the conflict.
The US decision to allow Ukraine to use long-range missiles has been criticized by Russia and some European leaders, who argue that it could lead to a further escalation of the conflict. However, Ukraine has welcomed the decision, arguing that it will help them defend their territory and sovereignty.
The escalation of the conflict has impacted global markets, with investors fleeing to safe-haven assets and global stocks briefly falling. The potential for a nuclear escalation has increased uncertainty and risk for businesses and investors, particularly those with exposure to Russia and Ukraine.
Landmine Crisis in Myanmar
Myanmar has overtaken Syria as the country with the highest number of landmine casualties, with 1,003 casualties recorded in 2023, according to the Landmine Monitor 2024 report. The report highlights the extensive use of landmines in Myanmar, with both the military junta and armed resistance groups deploying them.
The report also notes that landmines have increasingly been placed in civilian areas, including urban zones controlled by the military, often disguised as everyday objects, further endangering non-combatants. Civilians, including children, are frequently the victims, and reports indicate that the military uses civilians as human shields in mine-affected areas.
The landmine crisis in Myanmar has significant implications for businesses and investors, particularly those with operations or supply chains in the country. The increased use of landmines and the resulting casualties could lead to increased instability and insecurity, potentially impacting business operations and supply chains.
Armed Conflicts in Countries with High Poverty and Interethnic Inequalities
Armed conflicts in countries with high poverty and interethnic inequalities, such as Sudan, Somalia, the Democratic Republic of Congo, Myanmar, the Central African Republic, and Yemen, often receive little media attention but have significant implications for businesses and investors. These "forgotten wars" are often not sites of great power rivalry, but they can still have significant economic and geopolitical consequences.
Academia has not overlooked these conflicts, with hundreds of recent studies examining policies that can make a real difference in such conflicts. Three factors have been found to matter most for sustainable peace: political representation, economic opportunity, and security guarantees.
The ongoing war in Sudan, for example, has significant implications for businesses and investors, particularly those with operations or supply chains in the country. The war has led to significant economic hardship, with large segments of the population impoverished and desperate, making them more susceptible to recruitment by warlords or authoritarian leaders.
Potential Impact on Businesses and Investors
The escalation of the Russia-Ukraine conflict and the landmine crisis in Myanmar have significant implications for businesses and investors, particularly those with exposure to Russia and Ukraine or operations or supply chains in Myanmar.
The potential for a nuclear escalation has increased uncertainty and risk for businesses and investors, with global markets reacting negatively to the escalating tensions. The landmine crisis in Myanmar has significant implications for businesses and investors, particularly those with operations or supply chains in the country. The increased use of landmines and the resulting casualties could lead to increased instability and insecurity, potentially impacting business operations and supply chains.
Armed conflicts in countries with high poverty and interethnic inequalities, such as Sudan, Somalia, the Democratic Republic of Congo, Myanmar, the Central African Republic, and Yemen, also have significant implications for businesses and investors, particularly those with operations or supply chains in these countries. The ongoing war in Sudan, for example, has led to significant economic hardship, with large segments of the population impoverished and desperate, making them more susceptible to recruitment by warlords or authoritarian leaders.
Businesses and investors should closely monitor the situation in these countries and consider the potential risks and opportunities that may arise. They should also consider the potential impact of these conflicts on their operations, supply chains, and investments, and take appropriate measures to mitigate risks and capitalize on opportunities.
Further Reading:
1,000 days since Russia invaded Ukraine. And, Trump's proposed plan for your money - NPR
Cracks emerge in G20 consensus over Ukraine as US ramps up aid - VOA Asia
Myanmar overtakes Syria as country with highest landmine casualties - The Independent
Newspaper headlines: 'Putin's nuke threat' and 'Farmageddon!' - BBC.com
North Macedonia's Sekerinska Becomes NATO Deputy Chief - Radio Free Europe / Radio Liberty
Russia-U.S. tensions hit global markets as Putin lowers the threshold for a nuclear strike - CNBC
Ukraine fires first US-made long-range missiles into Russia - The Independent
Ukraine fires several US-made longer-range missiles into Russia for the first time - Yahoo! Voices
Ukraine struck Russia with American long-range missiles, officials say - POLITICO Europe
Themes around the World:
Fiscal and Credit Risks
Mexico faces fiscal challenges with rising public debt and potential downgrades in sovereign credit ratings. S&P warns Mexico is close to losing investment-grade status due to fiscal deficits, increased debt servicing costs, and risks from state-owned enterprises like Pemex and CFE. These factors could raise borrowing costs and constrain public finances.
Taiwan's AI-Driven Economic Boom
Fueled by surging global AI demand, Taiwan's economy is experiencing unprecedented growth, with projections nearing 6%. Semiconductor exports, especially AI chips from TSMC, drive this upswing. However, challenges include energy supply constraints and currency fluctuations, which may impact manufacturing costs and margins amid expanding overseas investments.
Expansion in Iraqi Market and Regional Trade
Iran aims to increase bilateral trade with Iraq to $20 billion within three years, leveraging its capacity to supply consumer goods, food, and industrial materials. Despite bureaucratic and regulatory challenges, Iraq remains a critical export market, underscoring the importance of modernizing trade infrastructure and strategic planning to maintain regional market share.
Australia-US-China Strategic Dynamics
Australia faces complex strategic pressures balancing its economic ties with China and security alliance with the US. Rising public concern over US interference and nuanced views on China shape policy and investment decisions. The AUKUS pact and defense spending reflect heightened regional security priorities, impacting trade relations and geopolitical risk assessments.
Financial Market Volatility and Risk Sentiment
US and global markets experienced heightened volatility in late 2025, influenced by hawkish Federal Reserve signals, disappointing tech sector performance, and geopolitical uncertainties. Risk appetite fluctuated, with equities and cryptocurrencies under pressure while safe-haven assets like gold showed mixed behavior. These dynamics affect capital flows, investment timing, and supply chain financing globally.
Foreign Direct Investment and Franco-Turkish Partnerships
French and Franco-Turkish firms have invested $4.1B from 2020-2024 and plan an additional $5.7B over three years, supporting over 143,000 direct jobs. These investments enhance Turkey’s production capacity, R&D, and sustainable development, signaling strong international confidence and strategic partnerships in key sectors.
Geopolitical and Global Economic Pressures
Geopolitical tensions and global economic shifts, including trade disruptions and competition in AI leadership, affect France’s investment climate. Europe’s lag in AI innovation compared to the US raises concerns about long-term market valuation and economic dynamism, influencing investor confidence and strategic priorities.
Government Stimulus and Fiscal Discipline
Thailand's government pursues fiscal discipline with transparent policies and stimulus measures, including co-payment schemes and infrastructure investment in the Eastern Economic Corridor. These efforts aim to bolster economic recovery, support consumption, and enhance competitiveness, reassuring credit rating agencies and investors about Thailand's economic management amid external and domestic uncertainties.
Rising Business Liquidations and Sectoral Pressures
A 23.9% increase in business liquidations, especially in finance, real estate, and trade sectors, signals deteriorating economic conditions. High interest rates, weak consumer demand, and rising costs strain businesses, threatening employment and economic stability, necessitating enhanced credit risk management and trade credit insurance.
Ukraine's Strategic Lithium Development
Ukraine is positioning itself as a future player in the global lithium market, critical for batteries and electric vehicles. The government is tendering lithium mining projects and pursuing reforms to attract Western partnerships. While global lithium demand is forecasted to grow structurally, Ukraine faces challenges including permitting, cost pressures, and competition. Success could integrate Ukraine into strategic supply chains for critical minerals.
Rupiah Redenomination Risks and Opportunities
Indonesia's plan to redenominate the Rupiah aims to simplify accounting and enhance digital payment efficiency. While theoretically neutral, implementation risks include short-term price volatility due to rounding and expectation effects, especially in informal cash-heavy sectors. Effective governance, clear rules, and communication are critical to mitigate inflationary pressures and maintain purchasing power.
EU’s Toughening Trade Stance Influenced by Germany
Germany’s evolving stance on China is catalyzing a tougher EU trade policy, including enhanced trade defense measures and scrutiny of Chinese investments. Germany’s shift from a free-trade advocate to a protector of strategic industries enables the EU to pursue stronger actions against unfair competition and supply chain vulnerabilities, aiming to safeguard critical sectors and reduce dependency on China amid rising geopolitical tensions.
China's Rare Earth Export Controls and Supply Chain Impact
China's export bans on certain rare earth minerals pose indirect risks to Taiwan's semiconductor supply chain. While TSMC claims minimal direct impact due to diversified sourcing and stockpiles, the broader ecosystem faces potential cost increases and supply disruptions, underscoring Taiwan's strategic vulnerability amid Sino-US trade tensions.
Russian Economic Slowdown and Recession Risks
Russia faces a potential recession by year-end 2025, with GDP growth slowing and contraction in export-oriented sectors like mining and metallurgy. Persistent inflation, labor market strain, and high interest rates challenge economic stability, affecting investment strategies and business operations within Russia.
Tech Sector Valuation and Market Sentiment
US technology stocks, heavily concentrated in indices, experienced significant declines amid investor skepticism about AI-driven growth sustainability and profitability. High-profile firms like Tesla face valuation pressures despite ambitious growth targets. This volatility affects global equity markets, risk appetite, and investment strategies, highlighting the need for cautious valuation assessments in tech-heavy portfolios.
Australian Equity Market Volatility
Australia's share market has experienced significant declines due to global risk aversion, tech valuation concerns, and inflation fears. Key sectors like financials, materials, and technology have been hit hard, reflecting investor caution amid uncertain global economic conditions and monetary policy outlooks, affecting capital flows and corporate investment strategies.
Political Volatility and Election Impact
Brazil faces heightened political volatility ahead of the 2026 presidential elections, with right-wing opposition testing new ticket pairings and ongoing judicial probes into corruption involving major political figures. This uncertainty could affect investor confidence, delay reforms, and influence fiscal discipline, impacting Brazil's macroeconomic stability and foreign investment climate.
Record German Trade Deficit with China
Germany faces a historic €87 billion trade deficit with China, reflecting a shift from a previously balanced relationship. German exports to China declined by 13.5% while imports increased by 8.3%, pressuring key sectors like automotive. This imbalance underscores challenges in competitiveness and intensifying geopolitical tensions impacting bilateral trade.
Critical Minerals and Sovereign Wealth Initiatives
Canada is positioning itself as a strategic player in critical minerals essential for the low-carbon and digital economy transition. The federal budget's creation of a $2 billion sovereign wealth fund and mining tax incentives aim to attract private capital and enhance domestic production. This focus supports supply chain resilience and offers new investment opportunities in sustainable resource sectors.
Energy Sector Expansion and Foreign Investment
Canada is aggressively expanding its energy infrastructure, including LNG, oil sands, and pipeline projects, aiming to become an energy superpower. Despite weak global oil prices, Canadian energy companies outperform due to lower breakeven costs and increased U.S. investment. However, foreign direct investment has declined recently, reflecting investor caution amid political and regulatory uncertainties.
Domestic Regulatory and Structural Challenges
Australian businesses face rising energy costs, restrictive industrial relations laws, and uncompetitive tax regimes, which hinder international competitiveness. Government efforts to support failing industries and ambitious climate targets add complexity to the operating environment, necessitating strategic adaptation for sustained growth and productivity improvements.
Escalating German Investments in China
Despite warnings, German companies increased investments in China by €1.3 billion between 2023 and 2024, totaling €5.7 billion. Automotive and chemical sectors lead this surge, deepening economic dependence on China. This raises concerns over political leverage Beijing may exert on Germany and the EU, complicating efforts to diversify supply chains and mitigate geopolitical risks.
Oil Market Dynamics Amid Sanctions and Oversupply
Global oil markets face conflicting forces: Western sanctions constrain Russian oil exports while OPEC and non-OPEC producers increase output, creating supply surpluses. This dynamic suppresses prices despite geopolitical tensions, affecting Russia's energy sector revenues and influencing global energy investment strategies.
Sanctions Impact on Russia-China Oil Trade
Expanding US and EU sanctions on Chinese ports and refiners have disrupted Russian oil flows to China, the world's largest importer. State-owned and private refiners are cautious, leading to reduced imports and a glut of discounted Russian crude. This dynamic pressures Russia's energy revenues and complicates supply chains in global energy markets.
Fiscal and Credit Rating Pressures
Mexico faces risks to its investment-grade sovereign credit rating due to fiscal deficits, rising public debt, and potential increased financial support for state enterprises like Pemex and CFE. Credit rating agencies warn that failure to contain fiscal imbalances and controversial policy decisions could lead to downgrades, affecting borrowing costs and investor sentiment.
China's Global Lending Shift
China has redirected over 75% of its overseas loans to upper-middle and high-income countries, with the US as the largest recipient receiving $200 billion across 2,500 projects. This shift from developing nations to wealthy economies reflects Beijing's strategic focus on critical infrastructure, minerals, and high-tech sectors, raising concerns about economic leverage and supply chain control.
US Dollar Weakness and Risk-Off Sentiment
The US dollar has weakened amid cautious investor sentiment driven by economic uncertainties, including the government shutdown and hawkish Federal Reserve rhetoric. Risk-off behavior has pressured equities and cryptocurrencies, while safe-haven assets like gold have seen price fluctuations. Currency volatility affects international trade costs and capital flows.
Investment Climate Improvement
Despite ongoing conflict, Ukrainian business leaders report a gradual improvement in the investment climate, with fewer viewing it as unfavorable. Factors aiding this include EU integration, trade preferences, deregulation, and digitalization. However, risks remain from military aggression, corruption, judicial weakness, and currency restrictions, influencing foreign and domestic investment strategies.
Taiwan's Semiconductor and AI Boom
Taiwan's economy is experiencing unprecedented growth driven by surging global demand for AI-related semiconductor chips, primarily produced by TSMC. This boom is propelling GDP growth toward 6%, reinforcing Taiwan's strategic importance in global tech supply chains. However, rising energy demands and currency volatility pose operational challenges for sustaining this momentum.
Real Estate Market Recovery and Policy Reforms
Cairo's real estate sector rebounds due to government reforms, interest rate cuts, and ambitious FDI targets aligned with Egypt Vision 2030. Increased demand for office and residential spaces, supported by infrastructure development and urban expansion, attracts both multinational corporations and domestic investors, enhancing the sector’s role in economic growth and capital inflows.
Stock Market Volatility and Sectoral Shifts
Thailand's stock market experienced volatility influenced by global concerns over an AI bubble and interest rate uncertainties. Despite this, sectors like technology, utilities, retail, and tourism show resilience, supported by strong corporate earnings and positive outlooks. Market dynamics reflect investor sentiment shifts, with opportunities in tech hardware and infrastructure amid ongoing global economic fluctuations.
Currency Market Volatility and Tax Policy Effects
Aggressive tax hikes in France and the UK have triggered capital flight towards USD assets, fueling a strong US dollar rally. This currency shift impacts global trade competitiveness, investment flows, and financial markets, requiring multinational businesses to adapt currency risk management and investment strategies accordingly.
Shifts in Eurozone Economic Leadership
Italy’s recent political stability contrasts with France’s turmoil, leading to a perceived role reversal in the eurozone. Investor confidence in Italian bonds has improved, while France faces credit rating downgrades and rising borrowing costs, signaling challenges to its economic leadership within the EU.
Economic Instability and Inflation Crisis
Iran faces severe economic instability marked by soaring inflation, currency devaluation, and rising commodity prices. The rial's depreciation against the dollar and surging gold prices exacerbate public distrust and economic anxiety. Persistent inflation, driven by structural imbalances and ineffective government policies, threatens purchasing power, deepens poverty, and complicates business operations and investment decisions.
Taiwan's Currency and Economic Risks
Taiwan's long-term policy of maintaining a low New Taiwan dollar exchange rate supports export giants but suppresses domestic wages and consumption, inflates housing prices, and creates systemic financial risks. The undervaluation, dubbed 'Taiwanese disease,' threatens economic stability and calls for urgent reforms in currency policy and financial regulation to mitigate vulnerabilities.
Inflation and Monetary Policy Challenges
Despite tight monetary policies, Turkey faces persistent high inflation (33.3% in Sept 2025) driven by food prices, service inflation, and gold price increases. Disinflation is slow, posing challenges for purchasing power, cost structures, and monetary stability, affecting business planning and investment returns.