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:

Domestic Financial Resilience

Despite external risks, Irish households, businesses, and banks maintain relatively healthy balance sheets with low debt levels and high savings. The domestic banking system shows capacity to absorb severe shocks, supporting economic stability. However, pockets of vulnerability remain among low-income households with high borrowings, necessitating cautious fiscal and monetary management.

Corporate Debt Surge Amid Trade War

Canadian businesses are engaging in a record corporate debt issuance exceeding $76 billion in 2025, driven by the need to retool supply chains amid escalating trade tensions. The influx of foreign issuers and hybrid bond structures reflects confidence but also increases corporate leverage, potentially heightening vulnerability to economic shocks and impacting credit markets and investment strategies.

Manufacturing and Industrial Diversification

The manufacturing sector, valued at $90 billion and growing under Vision 2030, is shifting from import dependence to localized, export-oriented production. Government initiatives like the National Industrial Development and Logistics Program promote advanced manufacturing, automation, and local content, driving industrial growth and supply chain modernization across key sectors.

Corporate Governance Reforms and Activist Investor Impact

Activist investors have challenged entrenched chaebol governance practices, exposing the 'Korea discount' and pushing for improved shareholder rights and transparency. Recent reforms and increased retail investor participation are driving changes in corporate behavior, potentially enhancing market valuations and attracting foreign capital, but also requiring sustained regulatory support.

Geopolitical and Global Economic Influences

South Africa’s trade and investment environment is increasingly shaped by global monetary policies, US dollar strength, and geopolitical tensions. The Federal Reserve’s cautious stance on rate cuts tightens liquidity for emerging markets, while global commodity price fluctuations and regional conflicts impact supply chains and investor risk perceptions, requiring adaptive strategies for international engagement.

Declining Foreign Debt and Fiscal Management

Indonesia's external debt decreased to US$424.4 billion in Q3 2025, with slower growth in public sector debt and contraction in private foreign debt. This trend reflects cautious fiscal management amid global financial uncertainties, influencing sovereign credit risk and foreign investor perceptions.

Geopolitical and Security Risks Ahead of G20

The upcoming G20 summit in Johannesburg has heightened security concerns, with preparations underway to mitigate potential protests and shutdowns. Such events pose risks of operational disruptions and require coordinated law enforcement efforts to ensure stability, which is vital for maintaining investor confidence and smooth business operations during high-profile international gatherings.

Impact of China-Japan Tensions on Trade

China's travel warnings against Japan amid Taiwan-related geopolitical tensions have caused sharp declines in Japanese tourism and retail stocks. The diplomatic rift threatens cross-border economic ties, affecting sectors reliant on Chinese visitors and students. This situation exemplifies how geopolitical disputes can rapidly disrupt regional trade, investment, and consumer markets in Asia.

Geopolitical Risk and Economic Fragmentation

Persistent geopolitical uncertainty is reshaping global investment landscapes. The US-China relationship is central, influencing trade policies, tariffs, and supply chains. Economic interdependence is increasingly weaponized, leading to rising trade barriers and fragmentation. Investors must adapt portfolios for resilience amid frequent shocks, focusing on regional diversification and sectors tied to critical minerals and supply chain security.

Inflation and Wage Growth Dynamics

Inflation remains elevated at around 3.8%, while real wage growth slows due to labor market pressures. This squeeze on consumer purchasing power may reduce domestic demand, impacting retail and service sectors. Persistent inflationary pressures also complicate monetary policy, influencing interest rates and borrowing costs for businesses.

Germany-China Economic Dependence

German industrial giants are deepening investments in China, with corporate investment rising to €5.7 billion in 2024. Despite government warnings about geopolitical risks, sectors like automotive and chemicals prioritize market access and profitability. This dependence poses strategic vulnerabilities, as China could leverage economic ties for political influence, complicating Germany's trade and supply chain resilience.

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.

Credit Rating Downgrades and Market Divergence

Despite downgrades by major rating agencies citing political fragmentation and fiscal challenges, France's stock market has shown resilience with notable gains. This divergence reflects market optimism driven by short-term liquidity and monetary policy expectations, contrasting with structural concerns over public debt and political instability, influencing investor strategies and risk assessments.

Political Instability and Leadership Speculation

Internal tensions within the ruling Labour Party and speculation over Prime Minister Keir Starmer's leadership contribute to political uncertainty. This instability undermines market confidence, influences fiscal policy decisions, and exacerbates economic uncertainty, potentially deterring foreign direct investment and complicating trade negotiations.

AI Policy and Innovation Drive

The Trump administration's 'Genesis Mission' aims to accelerate AI development akin to a 'Manhattan Project,' promoting federal coordination and unified AI regulation. This initiative, alongside rising AI-related job dismissals and regulatory debates, signals transformative shifts in technology sectors. Businesses must navigate evolving regulatory frameworks and workforce impacts while leveraging AI-driven growth opportunities in the US market.

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.

Military Conflict and Regional Instability

Ongoing intense fighting in eastern Ukraine, particularly around Pokrovsk and Zaporizhzhia, continues to destabilize the region. Russian advances and Ukrainian defensive efforts create a volatile security environment, complicating logistics, supply chains, and business operations, while increasing risks for foreign investors and multinational corporations operating in or near conflict zones.

Geopolitical Tensions Impacting Oil Markets

Heightened geopolitical risks, including Iran's seizure of a tanker near the Strait of Hormuz and ongoing conflicts involving Russia and Ukraine, have injected volatility into global oil markets. Iran's actions threaten critical energy chokepoints, potentially disrupting supply chains and elevating oil prices, affecting global energy security and trade flows.

Impact of Cyberattacks on Manufacturing Output

A severe cyberattack on Jaguar Land Rover caused a 25% drop in automotive production, significantly impacting UK industrial output and GDP. Such disruptions highlight vulnerabilities in supply chains and the importance of cybersecurity resilience for maintaining production continuity and investor confidence.

Foreign Reserves Milestone

Egypt's net international reserves surpassed $50 billion in October 2025, reflecting successful fiscal and monetary reforms. This strong reserve position enhances economic stability by safeguarding against external shocks, supporting exchange rate management, and ensuring uninterrupted imports and debt servicing. It also improves Egypt's creditworthiness, attracting further foreign investment and reinforcing macroeconomic resilience.

Economic Growth and Inflation Dynamics

Turkey's economy is projected to grow resiliently at around 3.4% in 2025-26 and 4% in 2027, driven by strong domestic demand and investments. However, inflation remains elevated (33.3% in Sept 2025) and is expected to decline slowly, posing challenges for monetary policy and business planning.

US-China Trade Tensions and Policy Uncertainty

US-China trade relations remain a critical fracture point with ongoing tariff disputes and technology export restrictions. Potential reinstatement of Trump-era tariffs and new legislative measures like the Gain AI Act exacerbate uncertainty. These tensions impact global supply chains, capital flows, and investment strategies, requiring businesses to navigate complex geopolitical and regulatory risks carefully.

Expanding Capital Market Participation

The Indonesian capital market reached over 19 million investors by October 2025, with a 58.4% increase in new investors compared to 2024. Growth is driven by younger demographics and extensive financial literacy initiatives by IDX. This broadening investor base enhances market depth, liquidity, and resilience, supporting long-term capital market development and inclusive economic growth.

UK Economic Slowdown Risks

The UK economy shows signs of stagnation with only 0.1% growth last quarter and rising unemployment reaching 5%, the highest in four years. This fragile economic state undermines business confidence, delays investments, and pressures earnings, raising recession fears that could significantly impact trade, investment, and consumer demand.

Foreign Investor Capital Outflows

Foreign investors withdrew Rp3.79 trillion (US$254 million) from Indonesian markets in November 2025, primarily from government bonds and Bank Indonesia securities. Despite short-term outflows, domestic trading activity surged, reflecting robust local investor engagement. Persistent foreign net selling since early 2025 signals cautious external sentiment, impacting liquidity and investment strategies in Indonesia's financial markets.

U.S.-Mexico Trade Relations and Tariff Negotiations

Progress in U.S.-Mexico trade talks continues amid tensions, including U.S. airline route cancellations and tariff threats. The stability of bilateral trade is critical for supply chains and market access, especially under the USMCA framework. Ongoing negotiations and tariff reprieves affect investment decisions and operational planning for companies engaged in cross-border commerce.

Investment Cycle and Infrastructure Growth

India’s domestic growth cycle is bottoming out, supported by low interest rates, easy liquidity, declining crude prices, and normal monsoon conditions. Government investments in infrastructure, manufacturing, and renewable energy, alongside private sector capex recovery and PLI scheme expansion, underpin a medium-term uptrend in investment, enhancing India’s integration into global supply chains and growth prospects.

Economic Slowdown and Recession Risks

The UK economy is showing signs of stagnation with only 0.1% growth in the last quarter and rising unemployment reaching 5%, a four-year high. This fragile economic phase undermines business confidence, delays investments, and pressures earnings, raising recession fears that could disrupt trade, investment, and supply chains across sectors.

Rising Federal Debt and Fiscal Challenges

Canada's fiscal outlook reveals a ballooning federal deficit projected at $78.3 billion, with controversial accounting masking a true gross debt-to-GDP ratio exceeding 43%. The decentralized fiscal structure complicates debt management, raising concerns among investors about sovereign risk and the government's capacity to sustain spending without jeopardizing economic stability and creditworthiness.

Emerging Tech M&A and Digital Transformation

Vietnam's technology sector sees a resurgence in mergers and acquisitions, focusing on AI, semiconductors, fintech, and digital infrastructure. Strategic deals by global and local players signal a shift towards building comprehensive tech ecosystems. This trend aligns with Vietnam's digital transformation goals and positions the country as a competitive hub for innovation-driven growth through 2028.

Rising Fiscal Deficit Concerns

Israel's fiscal deficit rose to 4.9% of GDP amid a sharp decline in public revenues, widening the gap between government spending and income. Persistent deficits may pressure public finances, affect credit ratings, and constrain government capacity to fund reconstruction and growth initiatives.

Geopolitical Tensions in Persian Gulf

Iran's military readiness in the Persian Gulf, especially around strategic islands and the Strait of Hormuz, is heightened amid escalating tensions with the US and Israel. Potential disruptions to this critical energy chokepoint threaten global oil markets, increasing geopolitical risk premiums and affecting international energy supply chains and trade routes.

Taxation and Benefit Clawbacks Affecting Workforce

High effective marginal tax rates due to overlapping government benefit clawbacks and income taxes are discouraging additional work and savings, particularly among seniors and low-to-middle income families. This 'clawback trap' reduces disposable income and may negatively impact labor market participation and consumer spending.

Supply Chain Diversification and New Market Development

In response to geopolitical and tariff challenges, India prioritizes diversifying trade partners and supply chains beyond traditional markets. Efforts focus on expanding exports to regions like Europe, Africa, ASEAN, and Latin America, reducing dependence on single countries for imports and exports, thereby enhancing trade resilience and mitigating risks from concentrated trade relationships.

Political and Parliamentary Scrutiny

Some MPs have called for a Royal Commission of Inquiry (RCI) citing concerns over sovereignty, transparency, and the negotiation process. They argue the ART may skew towards US interests and lack comprehensive public consultation. The government rejects these claims, emphasizing ongoing parliamentary briefings and stakeholder engagement to address concerns.

US-Taiwan Trade Relations and Tariff Concerns

Taiwan faces uncertainties from US tariffs, particularly under Section 232, which could impact its export-driven economy. While semiconductors are currently exempt, ongoing trade negotiations and tariff policies remain critical factors for Taiwan's economic stability and investor confidence.