Mission Grey Daily Brief - November 22, 2024

Summary of the Global Situation for Businesses and Investors

The election of Donald Trump as President of the United States has caused uncertainty in Europe and China, with European officials expressing concern about the potential impact on the war in Ukraine and relations with China. In Ukraine, the injury of a North Korean general and the use of an intercontinental missile by Russia have raised tensions, while North Korea and Russia have strengthened their relationship with a tourism drive and missile exchange. Meanwhile, Türkiye's comms chief has called for global cooperation on energy geopolitics, and Vietnam's new digital regulations have raised concerns about the country's business environment.

Donald Trump's Election and its Impact on Europe and China

The election of Donald Trump as President of the United States has caused uncertainty in Europe and China. European officials have expressed concern about the potential impact on the war in Ukraine and relations with China. Trump has repeatedly stated that he could end the conflict in Ukraine in one day, which has prompted fears that he will push for concessions that favour Russian President Vladimir Putin. European leaders are divided on how to respond to the situation, with some criticising German Chancellor Olaf Scholz for calling Putin to negotiate and others suggesting that Europe should move closer to China. However, European officials have stated that they do not want to be dragged into the foreign policy towards China that the new American administration will be engaged in.

Ukraine

In Ukraine, the injury of a North Korean general and the use of an intercontinental missile by Russia have raised tensions in the Russia-Ukraine conflict. The North Korean general, Col Gen Kim Yong Bok, was injured in a Ukrainian strike in Russia's Kursk region, marking the first casualty of a senior North Korean military officer in the escalating conflict. The attack may have targeted a command post used by Russian and North Korean forces, and North Korean troops fighting in Ukraine have been declared fair game and targets by the Ukrainian military. The use of an intercontinental missile by Russia has raised concerns about the potential for a global war, with Poland warning that Russia may be trying to send a message to Ukraine's Western backers.

North Korea and Russia's Strengthened Relationship

North Korea and Russia have strengthened their relationship with a tourism drive and missile exchange. High-level talks in Pyongyang have resulted in an agreement to increase the number of charter flights between the two countries to promote tourism. Additionally, South Korea has stated that Russia supplied air defence missiles to North Korea in exchange for its troops, with North Korea potentially receiving between $320 million to $1.3 billion annually from Russia for sending its troops to Ukraine. This exchange of troops and missiles has raised concerns about the potential impact on the war in Ukraine and the broader geopolitical situation in the region.

Türkiye's Call for Global Cooperation on Energy Geopolitics

Türkiye's comms chief has called for global cooperation on energy geopolitics, highlighting the pivotal role of energy in global geopolitics and the need for international collaboration to tackle growing challenges. The communications director has emphasised the importance of energy in the struggle for global power and the need to address geopolitical crises, regional conflicts, climate change-induced natural disasters, and supply chain disruptions. He has stressed that energy should serve as a tool for regional and global cooperation, not conflict. This call for global cooperation has implications for businesses and investors in the energy sector, as well as those operating in regions affected by geopolitical tensions and energy-related challenges.

Vietnam's New Digital Regulations and their Impact on Business

Vietnam's new digital regulations, which require companies to verify the identities of users and share this information with authorities, have raised concerns about the country's business environment. The regulations echo a cyber identification scheme unveiled by Beijing earlier this year, which was met with international backlash over fears of government overreach, further surveillance, and the erosion of free speech. The regulations come at a precarious time for Vietnam's economy, as the country was seen as a major winner from former US president Donald Trump's trade war with China in his first term. However, success during Trump 2.0 is far from certain, as the president-elect has threatened much wider tariffs on goods from China and elsewhere. The tariffs could cut Vietnam's economic growth by up to 4 percentage points, dealing a devastating blow to the country's growth and potentially threatening business at an especially precarious time.

Themes around the World:

Strategic Conglomerate Investments in Infrastructure

Vietnamese conglomerates plan to invest heavily in infrastructure and renewable energy, with Vingroup leading a $70 billion high-speed railway project. These investments align with national development goals but carry execution and financial risks. The expansion into new sectors aims to reinforce market positions and create synergies, yet success depends on effective management of unfamiliar ventures and regulatory environments.

Macroeconomic Stability and Inflation Outlook

Egypt's Central Bank projects inflation to decline from 28.3% in 2024 to 10.5% in 2026, aiming for a 7% target by late 2026. This signals improving price stability, which enhances investor confidence and supports sustainable economic growth, crucial for trade and investment planning amid global commodity price volatility and geopolitical risks.

Geopolitical Balancing and Regional Diplomacy

Egypt’s strategic diplomacy balances relations with global powers including the US, Russia, and China, while managing complex ties with Israel. Hosting international summits and leveraging its geopolitical position enhances Egypt’s regional influence, stabilizes foreign relations, and supports economic partnerships critical for trade, investment, and security in a volatile Middle East environment.

Economic Controls Amid Conflict

Ukraine's central bank imposed strict financial controls including limits on cash withdrawals and bans on forex purchases to stabilize the economy amid Russia's invasion. These measures aim to prevent capital flight and banking sector instability but constrain liquidity and complicate business operations, impacting investment confidence and supply chain financing.

Currency Exchange Rate Volatility

Fluctuations in the Pakistani rupee against major currencies affect trade competitiveness, inflation, and investment decisions. Exchange rate instability increases uncertainty for importers and exporters, influencing pricing and profit margins. Effective monetary policy and forex market interventions are critical to stabilize the currency and support economic stability.

Hyperinflation and Economic Stagflation Threat

Iran's inflation rate is projected to exceed 60% by early 2026, driven by soaring food prices and structural economic imbalances. Rising poverty affects over a third of the population, eroding consumer purchasing power and fueling social unrest. Persistent stagflation undermines economic growth, deters investment, and disrupts supply chains.

Security Challenges and US Cross-Border Operations

The US has signaled readiness for land-based operations against Mexican drug cartels without formal war declarations, heightening sovereignty concerns. This escalates risks of trade disruptions, increased border inspections, and insurance costs, affecting supply chain reliability and cross-border business operations critical to Mexico's trade-dependent economy.

Domestic Growth Cycle and Investment Outlook

India's domestic growth cycle shows signs of bottoming out with supportive factors such as low interest rates, easing crude oil prices, and a normal monsoon. Government investments in infrastructure, manufacturing, and renewable energy, coupled with private sector capex recovery and Production Linked Incentive (PLI) scheme expansion, underpin a medium-term uptrend in investment, fostering sustained economic momentum despite global trade uncertainties.

Political Instability and China Tensions

Japanese firms express optimism under PM Takaichi but remain concerned about risks from her minority government and escalating tensions with China, especially regarding Taiwan. These geopolitical uncertainties could dampen investment appetite and affect supply chains, while also influencing Japan's trade relations and regional security dynamics.

Investment Landscape Amid Geopolitical Uncertainty

Investors face a new global order marked by economic fragmentation, rising trade barriers, and geopolitical shocks. Traditional portfolio diversification is less effective as equities and bonds increasingly correlate. Central bank independence is challenged, increasing policy unpredictability. Geographic diversification towards emerging markets and resilient sectors is crucial to withstand frequent disruptions and inflation-growth shocks.

Turkey's Regional FDI Hub Ambitions

Turkey aims to reclaim its status as a major regional foreign direct investment (FDI) hub, supported by strong economic growth, improved credit ratings, and structural reforms. With a young, educated population and strategic trade agreements covering 62% of exports, Turkey is positioned to attract increased FDI, fostering sustainable economic development and regional integration.

Bank of England Monetary Policy Uncertainty

The Bank of England's interest rate decisions amid persistent inflation and economic slowdown create market uncertainty. Anticipation of rate hikes or holds influences bond yields, equity valuations, and borrowing costs, affecting corporate investment and consumer spending. The central bank's policy path remains a critical factor for financial stability and economic growth.

Concentration of Corporation Tax Revenue

Ireland’s public finances are increasingly dependent on corporation tax from a small number of large US multinationals, mainly in tech and pharmaceuticals. This concentration heightens fiscal vulnerability to shifts in global tax policies, trade barriers, and sector-specific downturns, posing risks to government revenue stability and public expenditure planning.

Corporate Borrowing and Global Credit Market Impact

Japanese companies have dramatically increased foreign-currency bond issuance, surpassing yen-denominated debt for the first time. This borrowing spree reflects renewed corporate confidence and is reshaping global credit markets, affecting interest rates, investor allocations, and cross-border financing strategies.

Defense Industry Collaboration and Innovation

Israel deepens defense cooperation with India through MoUs focusing on co-development, co-production, and technology transfer in AI, cyber security, and advanced systems. This partnership strengthens operational capabilities and supports Israel’s defense industrial base amid ongoing regional security challenges.

Start-up Ecosystem and Equity Funding Leadership

South Africa leads Africa in start-up equity funding, securing 30% of the continent's total equity investments in 2025. The mature investment environment, strong corporate participation, and sectoral strengths in fintech, healthcare, and deep tech position South Africa as a key innovation hub, attracting significant venture capital and fostering economic diversification.

Stock Market Volatility and Leverage Risks

South Korea's stock market, led by the Kospi index, has surged over 70% in 2025, driven by AI-fueled semiconductor growth. However, rising retail investor leverage and margin loans have heightened volatility risks, with warnings of a potential policy-driven bubble. Regulatory oversight is critical to prevent destabilizing corrections that could impact investment strategies and market confidence.

Stock Market Resilience Amid Uncertainty

Despite political and fiscal challenges, the French stock market (CAC 40) has shown resilience, reaching record highs driven by strong corporate earnings. This divergence from credit rating concerns highlights short-term market liquidity and optimism but may mask underlying structural risks, affecting investment strategies and portfolio allocations.

Massive U.S. Investment Commitments

South Korea has committed over $350 billion in investments to the U.S. to avoid tariffs, including $200 billion in cash and $150 billion in shipbuilding and industrial projects. While this strengthens bilateral ties, it raises concerns about domestic economic weakening and potential hollowing out of South Korea’s manufacturing base due to capital outflows.

Currency Volatility: Sterling Weakness vs US Dollar Strength

The British Pound faces significant depreciation pressures due to persistent inflation, political instability, and economic growth concerns, while the US Dollar strengthens on aggressive Fed rate hikes and safe-haven demand. This divergence affects trade competitiveness, import costs, and foreign investment attractiveness, complicating currency risk management for UK businesses.

Investment Risk Perceptions in Africa

Despite improvements, South Africa and other African countries face ongoing investment risks related to political uncertainty, regulatory changes, and infrastructure deficits. However, reform momentum and regional integration efforts like AfCFTA offer long-term opportunities. Investors must balance risk with potential rewards, emphasizing due diligence and strategic engagement in the continent’s evolving economic landscape.

Financial Market Resilience and Equity Rally

South African financial markets show resilience amid global uncertainty, with equities experiencing their longest monthly rally since 2013. Optimism is driven by domestic economic prospects, expectations of global monetary easing, and improved investor sentiment following the greylist exit. Key sectors such as banking, technology, and telecommunications lead gains, signaling renewed appetite for emerging-market assets and potential for sustained capital inflows.

Regional Competition for Investment

India’s robust FDI inflows contrast sharply with Pakistan’s declining foreign investment, highlighting differences in regulatory frameworks, infrastructure, and policy stability. This regional divergence influences multinational corporations’ strategic decisions and shifts supply chain dynamics in South Asia.

US Dollar Volatility Risks

Bank of America warns of 'two-way' risks for the US dollar amid uncertain monetary policy, global economic health, and geopolitical tensions. The dollar could either appreciate sharply, impacting export competitiveness, or depreciate, fueling inflation. This unpredictability complicates strategic planning for trade, investment, and currency risk management globally.

Fiscal Policy Shift and Budget Priorities

Prime Minister Mark Carney's first federal budget signals a generational shift with increased deficit spending aimed at infrastructure, defence, housing, and innovation. The budget seeks to stimulate growth amid monetary policy limits, but faces challenges in translating projected deficits into effective projects, influencing investor sentiment and economic competitiveness.

Credit Market Volatility and Corporate Borrowing Challenges

Credit market disruptions in Brazil have increased borrowing costs and investor caution, leading to a marked reduction in corporate bond issuances. Companies are scaling back or canceling debt market plans, which constrains capital availability and may slow corporate investment and expansion in Latin America’s largest economy.

Industrial Decline and Job Losses

The German industrial sector, particularly machinery manufacturing and automotive, is experiencing a sharp downturn with production declines over 22% since pre-COVID times. Major companies plan substantial job cuts, signaling a weakening industrial base that disrupts supply chains and reduces Germany’s export capacity, affecting global business operations.

Export Growth Driven by Non-Oil and Gas Sector

Indonesia recorded $209 billion in exports by September 2025, an 8.14% increase year-on-year, mainly driven by a 9.57% rise in non-oil and gas exports. Manufacturing and agriculture sectors, including palm oil and electronics, led growth. This diversification strengthens Indonesia’s trade resilience and attractiveness for foreign investors targeting manufacturing and agribusiness supply chains.

Global Investment Hub Emergence

Saudi Arabia is positioning itself as a global investment hub, evidenced by a 24% increase in foreign direct investment to $31.7 billion in 2024. Hosting the Future Investment Initiative with over 8,000 participants, the Kingdom attracts major global financial institutions, reinforcing its role as a bridge between global capital and Middle Eastern markets, enhancing trade and investment opportunities.

Financial System Stability

Indonesia's financial system remained stable in Q3 2025, supported by coordinated policy efforts among key institutions. Growth in household consumption, investment, and monetary liquidity underpins economic expansion, while vigilance against global risks such as US tariffs and interest rate changes continues to safeguard market confidence.

National Champions and Infrastructure Risks

Vietnam's government promotes large private conglomerates like Vingroup to lead major infrastructure projects, including a $70 billion high-speed railway. While this boosts national champions, concerns arise over financial risks, high leverage, lack of experience, and potential state subsidies. The strategy reflects a shift from liberalization to state-backed growth, raising investor caution over credit concentration and governance.

Trade and Tariff Negotiations Post-Peace Accord

Following a Trump-mediated peace agreement with Cambodia, Thailand is actively pursuing enhanced trade agreements with the US, aiming to reduce tariffs and improve market access. Preliminary deals include tariff eliminations on most US goods, signaling potential growth in exports and investment, though detailed negotiations remain ongoing, influencing regional trade dynamics and investor confidence.

Robust Domestic Economic Resilience

Despite global headwinds, India maintains strong GDP growth forecasts (~6.6-7%), low inflation (~1.5%), and fiscal prudence. Structural reforms like GST 2.0 and targeted fiscal schemes support consumption and investment. This resilience underpins India's attractiveness for investors and buffers against external shocks, sustaining economic momentum.

Fiscal Consolidation and Economic Outlook

South Africa's Medium-Term Budget Policy Statement projects a modest economic growth of 1.2% in 2025, with hopes pinned on structural reforms in energy and logistics. Improved fiscal discipline, stronger revenue collections, and restrained government spending signal a turning point, enhancing investor confidence and potentially leading to sovereign credit rating upgrades.

US Strategic Balancing on Ukraine Conflict

The US exhibits a complex approach, balancing military support with diplomatic engagement and selective withdrawal, pressuring European allies to assume greater responsibility. This strategy reflects internal divisions and geopolitical recalibration, influencing arms supply, sanctions enforcement, and the broader security environment affecting investment and trade in the region.

Banking Sector Resilience and Financial Stability

Egypt's banking sector demonstrates robust financial health with capital adequacy at 18.3%, liquidity well above regulatory thresholds, and strong profitability. Foreign currency liquidity is ample, supported by rising exports, tourism, remittances, and FDI. Macroprudential policies ensure household debt sustainability, underpinning credit growth aligned with GDP expansion, thus reinforcing financial system stability for investment and trade.