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Mission Grey Daily Brief - November 25, 2024

Summary of the Global Situation for Businesses and Investors

The world is bracing itself for the return of Donald Trump to the White House, with threats of abortion bans, mass deportations, and uncertainty about the future of democracy. European leaders are concerned about the impact of Trump's policies on the continent, particularly his proposed tariffs on imports and withdrawal from the Paris Climate Agreement. Meanwhile, India and China are seeking to improve economic ties in the face of Trump's protectionist policies. In Russia, 500 North Korean troops were reportedly killed in a strike in the Kursk region, marking the first major casualty incident for the Korean People's Army while fighting Ukraine. Pakistan's government has blocked expressways, shut down cell phone and internet service, and placed shipping containers across major thoroughfares amid mass protests calling for the release of former Prime Minister Imran Khan. Two boats capsized off the coast of Madagascar in the Indian Ocean, resulting in the deaths of 24 people and the rescue of 42 others.

Trump's Return to the White House

The return of Donald Trump to the White House has raised concerns among European leaders and global observers. Trump's first term was marked by welfare cuts, tariffs, and controversial policies, including withdrawing from the Paris Climate Agreement. Trump's protectionist policies, such as imposing tariffs on imports, could strain Europe's economy, which is already struggling to compete with China and the United States. Additionally, Trump's approach to the conflict in Ukraine and potential withdrawal from NATO could leave Europe vulnerable to Russian aggression.

India-China Economic Ties

India and China are seeking to improve economic ties in the face of Trump's protectionist policies. China has recently become India's top trade partner, and easing border tensions could further strengthen economic cooperation. However, Trump's proposed tariffs on Chinese goods could impact India's economy, as India is a significant trading partner with China. India's businesses and investors should monitor the situation closely and consider diversifying their supply chains to mitigate potential risks.

North Korean Casualties in Russia

Ukrainian media reported that a strike on North Korean forces in the Kursk region of Russia killed at least 500 troops. This incident marks the first major casualty for the Korean People's Army while fighting Ukraine. The sheer number of deaths may pose challenges for Pyongyang to explain at home. This development could impact the dynamics of the conflict in Ukraine and shape the strategic considerations of various stakeholders. Businesses and investors should monitor the situation and evaluate the potential implications for their operations in the region.

Pakistan's Government Blocks Expressways

Pakistan's government has blocked expressways, shut down cell phone and internet service, and placed shipping containers across major thoroughfares amid mass protests calling for the release of former Prime Minister Imran Khan. Khan is facing 150 criminal charges and has been serving a three-year prison sentence since last year. The government's response to the protests could impact the stability of the country and create challenges for businesses and investors. It is crucial to monitor the situation closely and assess the potential risks to operations and investments in Pakistan.


Further Reading:

Daybreak Africa: Madagascar boat accident claims two dozen lives, 42 rescued - VOA Africa

Hard Numbers: North Koreans killed in Russia, Ireland approaches crucial vote, Pakistan locks down over Khan, Bitcoin to the moon! - GZERO Media

Hope grows for India-China economic ties amid Trump’s tariff threats - This Week In Asia

Op-ed: Donald Trump: the United States’ president, the world’s headache - The Huntington News

Themes around the World:

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U.S.-China Trade Tensions and Business Decisions

Despite escalating tariffs and trade tensions, many U.S. firms remain in China due to its large market and stable policies. However, tariff hikes increase costs for U.S. companies and consumers, complicate supply chains, and create strategic dilemmas about reshoring versus maintaining China operations amid geopolitical uncertainties.

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Market Volatility Amid Political and Economic Uncertainty

September historically brings market volatility, exacerbated by political tensions, tariff uncertainties, and Federal Reserve policy doubts. Rising Treasury yields and concerns over tech sector valuations contribute to stock market declines, impacting investor confidence and global market stability.

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Finance Minister Removal and Fiscal Concerns

The abrupt dismissal of Finance Minister Sri Mulyani Indrawati has unnerved investors due to fears of deteriorating fiscal discipline under President Prabowo's populist agenda. Her exit triggered rupiah depreciation, stock sell-offs, and concerns over widening budget deficits, raising questions about Indonesia's ability to maintain prudent fiscal policy and sustain investor trust in the medium term.

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Employee Benefits Over Workplace Flexibility

Canadian workers prioritize financial benefits such as health insurance, paid sick leave, and bonuses over flexible work arrangements. This preference impacts employer strategies on talent retention and labor costs, which in turn affect operational efficiency and competitiveness in the Canadian market.

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Social Inequality and Economic Discontent

Widespread protests reflect deep-rooted frustrations over inequality, inflation, mass layoffs, and perceived government corruption. These socio-economic issues threaten social stability and could lead to policy shifts increasing fiscal burdens, affecting business costs, consumer demand, and overall economic growth prospects.

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Construction Sector Growth Amid Recovery

Ukraine’s construction industry is projected to expand by 16.2% in 2025, driven by international aid, government recovery efforts, and infrastructure rebuilding. This growth presents opportunities for investors and contractors despite the challenging environment. Sustained financial assistance and modernization initiatives are critical to supporting Ukraine’s post-conflict economic stabilization and development.

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M&A Activity Amid Turmoil

Despite political and economic uncertainties, France remains an attractive M&A destination due to its strategic sectors like energy and luxury goods. Goldman Sachs anticipates increased deal activity in H2 2025, reflecting investor confidence in France's long-term market potential, which supports cross-border investments and supply chain integration.

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Currency Appreciation Challenges Exporters

The Taiwan dollar's 12% appreciation in 2025 has intensified financial pressures on exporters, eroding revenues and margins, especially for traditional manufacturers with limited hedging capabilities. This currency strength, driven by trade inflows and speculative activity, complicates competitiveness amid US tariffs and global economic uncertainties, prompting regulatory caution to stabilize markets.

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Challenges in Anti-Corruption and Governance

Ukraine’s ongoing battle with systemic corruption, rooted in historical and institutional legacies, continues to affect governance and economic reforms. Despite progress in transparency and accountability mechanisms, recent political moves have threatened anti-corruption institutions, impacting investor confidence and EU accession prospects. Strengthening governance remains vital for sustainable business operations and international integration.

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UN Sanctions Snapback Impact

The reinstatement of UN sanctions on Iran, triggered by European powers, threatens to severely destabilize Iran's economy. The sanctions aim to freeze assets, block arms deals, and restrict missile development, potentially causing inflation to soar to 90%, currency collapse, and economic contraction, thereby disrupting trade, investment, and supply chains significantly.

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Advancements in AI and Technology Sectors

Japanese firms in semiconductors and AI-related technologies, such as Advantest and SoftBank Group, are driving market gains and positioning Japan as a key player in the global AI supply chain. This technological leadership attracts investment and supports long-term growth prospects in high-value industries.

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US Tariffs Impact South Korean Exports

South Korea faces significant challenges from US tariffs, including a 15% levy on key exports like automobiles, semiconductors, and steel. These tariffs could reduce South Korea's GDP growth by up to 0.6 percentage points. Despite tariff exemptions and cost absorption by companies, the new trade barriers threaten export competitiveness and complicate supply chains, prompting cautious economic outlooks.

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China-Australia Trade Recovery

Following the lifting of Chinese trade bans on Australian exports, business ties are gradually normalizing. While two-way trade reached nearly $312 billion in 2024, exports have declined due to falling iron ore prices. Australian companies cautiously re-engage with China’s vast market, balancing growth opportunities against geopolitical risks and past disruptions, impacting investment and supply chain strategies.

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Regional Headquarters Licensing and Business Hub Development

Saudi Arabia granted 34 licenses for regional headquarters in Q2 2025, reflecting its ambition to become the Middle East's leading business hub. The Riyadh Regional Headquarters Program offers tax exemptions and regulatory support, attracting multinational corporations and reinforcing the Kingdom’s position as a strategic investment destination.

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Rising Sovereign Debt and Fiscal Challenges

France's public debt has surged to nearly 114% of GDP, making it the third most indebted Eurozone country. The government's struggle to implement austerity measures amid political opposition risks further downgrades by credit rating agencies, increasing borrowing costs and potentially triggering capital outflows, which could destabilize supply chains and investment flows.

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US-China Business Confidence Collapse

US companies' confidence in China has plummeted to a historic low of 41%, driven by escalating geopolitical tensions, regulatory unpredictability, and slowing Chinese economic growth. This erosion of trust signals potential shifts in investment strategies, supply chain diversification away from China, and a reevaluation of long-term commitments, impacting bilateral trade and global economic stability.

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Economic Fundamentals Amid Protests

Despite the political turmoil, Indonesian financial regulators assert that the country's economic fundamentals remain solid. The government plans incentive packages and monetary interventions to stabilize markets and support economic recovery, aiming to minimize the protests' impact on growth, which reached 5.12% annually in Q2 2025, thus maintaining investor confidence in the medium term.

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Yen Depreciation and Currency Volatility

The Japanese yen has weakened significantly following political upheaval, reaching levels around 148 per US dollar. Yen depreciation benefits exporters by enhancing overseas earnings but raises import costs, fueling inflationary pressures. Currency volatility poses risks for supply chains, international trade contracts, and financial market stability, influencing global investor strategies toward Japanese assets.

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India's Economic Growth Resilience

Despite tariff pressures, India’s economy showed unexpected acceleration with 7.8% GDP growth in Q2 2025, supported by strong private consumption and government spending. This resilience sustains investor confidence and positions India as a leading emerging market, though export challenges may temper future growth.

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Political Instability and Market Volatility

Indonesia faces significant political unrest marked by protests against lawmakers' high allowances, tax hikes, and inequality. This unrest has led to sharp declines in the stock market and currency depreciation, increasing the equity risk premium and investor caution. The political turbulence threatens to undermine fiscal credibility and investor confidence, impacting foreign investment and market stability.

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Bilateral Relations and Public Perception

Polls indicate a majority of Mexicans perceive the bilateral relationship with the US as deteriorating, reflecting dissatisfaction with government management of US interactions. This public sentiment influences political risk and may affect future cooperation on trade, security, and migration policies, impacting cross-border business environments.

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Expansion of Egypt’s IT and Digital Economy

Egypt’s IT market is projected to nearly triple by 2031, driven by government digital initiatives, 5G rollout, and growing enterprise demand for cloud and software services. This sector growth enhances Egypt’s competitiveness in the global digital economy, attracting investment and supporting innovation across industries.

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Banking Sector Resilience and Credit Upgrades

S&P Global Ratings upgraded credit ratings of major Vietnamese banks, reflecting improved asset quality, stable deposit funding, and supportive monetary policy with lowered interest rates. Non-performing loans declined, and regulatory reforms enhance governance. However, credit risks remain elevated due to high private sector credit-to-GDP ratios. The banking sector's resilience is critical for sustaining investment and economic growth.

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Political and Economic Leadership Changes

Recent UK government reshuffles and appointments aim to strengthen economic expertise ahead of a challenging budget. However, political uncertainty and speculation over tax hikes contribute to market nervousness. Leadership decisions will be critical in restoring fiscal credibility, shaping investor confidence, and influencing the UK's economic trajectory and international business environment.

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North Sea Oil and Gas Exodus Risk

The UK’s oil and gas sector faces a strategic exodus of contractors due to high taxes, regulatory uncertainty, and lack of new exploration licenses. This threatens the supply chain, energy security, and government revenues, potentially undermining the energy transition and increasing reliance on imports, impacting investment and operational stability in the sector.

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US-Mexico Political Tensions

Rising political tensions between Mexico and the US, highlighted by disputes over cartel policies, DEA initiatives, and US tariffs, create uncertainty impacting bilateral trade and investment. President Sheinbaum's firm stance on sovereignty and rejection of US military actions underline potential risks for cross-border cooperation and supply chain stability.

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Impact of US Tariffs on Trade

US tariffs, including a 10% baseline and sector-specific levies up to 27.5%, have significantly disrupted German exports, especially to the US, which accounts for 10% of German exports. The tariffs have led to front-loading effects followed by sharp reversals, depressing manufacturing output and investment, and intensifying economic uncertainty, particularly for Mittelstand companies less able to relocate production.

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Vietnam's Consumer Optimism and Spending Trends

Vietnam leads ASEAN in consumer sentiment with a score of 67, reflecting confidence in economic, political, and social stability. Despite inflation concerns, cautious spending prevails. Digital payments and e-wallet adoption are high, supporting retail growth. Consumer optimism underpins domestic demand, which is vital for sustaining economic momentum amid external trade and inflationary pressures.

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Corporate Strategic Realignments and Investments

Multinational corporations are recalibrating their presence in Mexico, with GE Appliances relocating operations to the U.S. due to trade and labor cost considerations, while others like L’Oréal and Amazon Web Services are expanding investments. These shifts reflect nuanced corporate responses to geopolitical risks and evolving market conditions in Mexico.

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Vietnam Real Estate Market Growth

Vietnam's real estate market reached USD 29.5 billion in 2024, with forecasts projecting growth to USD 34.4 billion by 2033. Urban migration, infrastructure projects, and government policies drive demand, especially in satellite cities. Sustainability and smart technologies are increasingly prioritized, attracting foreign investment and supporting long-term sector development.

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Current Account Deficit and Trade Dynamics

Australia recorded its ninth consecutive current account deficit, driven by declining commodity prices, notably iron ore and coal, and increased imports such as non-monetary gold and travel services. This persistent deficit reflects structural trade challenges, affecting currency stability, foreign investment inflows, and Australia's external financial position.

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Economic Growth and Investment Outlook

UK economic growth forecasts have been downgraded to around 1.2% for 2025 and 1% for 2026, with sluggish demand and subdued business investment due to higher labor costs and global uncertainties. Surveys indicate reduced capital spending intentions, highlighting cautious corporate sentiment that may constrain long-term growth and productivity improvements.

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Monetary Policy and Market Volatility

US Federal Reserve policy uncertainty, exacerbated by political interference and mixed economic data, influences Mexican financial markets. Anticipated Fed rate cuts and debates over central bank independence affect investor sentiment, bond yields, and equity valuations, with spillover effects on Mexico’s capital markets and currency stability.

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Federal Reserve Policy Uncertainty

Investor anxiety over the Federal Reserve's independence and potential interest rate cuts amid political pressures, including from the Trump administration, creates market volatility. Key US inflation and employment data are closely watched, as Fed decisions significantly influence global capital markets, borrowing costs, and investment strategies.

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Brazil's Economic Performance and Outlook

Brazil's economy slowed to 0.4% growth in Q2 2025 but outperformed forecasts, driven by services and extractive industries. Inflation cooled slightly, aided by energy discounts, but remains above target, keeping interest rates high. The central bank signals possible rate cuts in 2026 amid cautious optimism. Economic resilience amid external shocks supports investor confidence but growth challenges persist.

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US Tariffs Impact on Indian Economy

The US has imposed a 50% tariff on Indian exports, targeting labor-intensive sectors like textiles, gems, and footwear. This move threatens a $55-60 billion hit to India's economy, risking job losses and reduced export competitiveness. The tariffs exacerbate trade tensions, potentially slowing growth and disrupting supply chains reliant on US markets.