Mission Grey Daily Brief - December 11, 2024

Summary of the Global Situation for Businesses and Investors

The fall of the Assad regime in Syria has sent shockwaves across the Middle East, with Israel and Turkey striking Syrian military targets and rebels drawing up a hit list of Assad regime officials. The rebel group HTS, now in power in Syria, has been on the U.S. list of terrorist groups since 2012, complicating the U.S.'s ability to work with the new government. Meanwhile, a militia fighting on behalf of the Buddhist Rakhine minority group has driven Myanmar's army out of its last outpost along the country's 168-mile border with Bangladesh. In Iran, officials have closed schools and government offices due to dangerous levels of air pollution. Canada is facing the prospect of a tariff war with the U.S., with President-elect Donald Trump threatening to impose tariffs on most trade partners. Russia's ongoing conflict with the West and escalating tensions with NATO raise concerns about a potential large-scale war.

Syria's Political Upheaval and Regional Implications

The fall of the Assad regime in Syria has sent shockwaves across the Middle East, with Israel and Turkey striking Syrian military targets and rebels drawing up a hit list of Assad regime officials. The rebel group HTS, now in power in Syria, has been on the U.S. list of terrorist groups since 2012, complicating the U.S.'s ability to work with the new government. The rapid demise of two pivotal elements in Iran's "axis of resistance"—the Assad regime and Hezbollah leader Hassan Nasrallah—has thrown the region into turmoil. Iran's massive investments in Syria, including oil infrastructure and telecommunications, have effectively vanished, and the fall of Assad disrupts critical trade routes and access to Mediterranean ports, further straining Iran's battered economy. The rapid and overwhelming advance of the militia alliance led by HTS, a former al-Qaida affiliate, marks a generational shift in the Middle East's political landscape. However, the rebel alliance has yet to outline its vision for Syria's future, leaving uncertainty in a region with no established framework for such a transition.

Myanmar's Border Conflict and Regional Stability

In Myanmar, a militia fighting on behalf of the Buddhist Rakhine minority group has driven Myanmar's army out of its last outpost along the country's 168-mile border with Bangladesh. The rebel group now claims control of the northern part of Rakhine state, where locals have pushed for independence. This development raises concerns about regional stability and the potential for further conflict along the border. The situation highlights the ongoing tensions between the central government and minority groups in Myanmar, and the potential for these tensions to escalate into armed conflict.

Iran's Air Pollution Crisis and Societal Impact

In Iran, officials have closed schools and government offices due to dangerous levels of air pollution. This crisis has forced schools to move classes online and disrupted the daily lives of millions of Iranians. The situation highlights the urgent need for environmental reforms and sustainable development in Iran, as well as the potential for social unrest and health issues due to the pollution. The crisis also underscores the broader challenges facing Iran, including economic struggles and regional instability.

Canada-U.S. Trade Tensions and Economic Impact

Canada is facing the prospect of a tariff war with the U.S., with President-elect Donald Trump threatening to impose tariffs on most trade partners. A Bloomberg analysis found that these tariffs would have wildly different effects on various countries, with Canada being a certain victim due to its reliance on the U.S. consumer market. The analysis predicts that Canada's net exports would decline by a third under a 20-per-cent U.S. tariff, which would have a profound impact on Canada's economy and well-being. This situation underscores the risks associated with Canada's underpopulation, which has limited the country's ability to create new businesses and compete in the global market. The potential for a tariff war also highlights the importance of diversifying trade partnerships and strengthening domestic markets to mitigate the impact of external shocks.

Themes around the World:

Domestic demand pivot and policy easing

Beijing is prioritizing consumption-led growth in the 15th Five-Year Plan (2026–30), targeting final consumption above 90 trillion yuan and ~60% of GDP. The PBOC signals “moderately loose” policy and ample liquidity. Impacts include shifting sector opportunities toward services and consumer subsidies.

US-China Economic Competition Intensifies

US-China relations remain a dominant force in global economics, with ongoing tensions over technology, trade, and security. These dynamics influence market access, regulatory risk, and supply chain resilience for international businesses operating in or sourcing from both countries.

Energy transition meets grid constraints

Renewables are growing rapidly, yet Brazil curtailed roughly 20% of wind/solar output in 2025 with estimated losses around BRL 6.5bn, reflecting grid bottlenecks. Investors must factor transmission availability, curtailment clauses and regulatory responses into projects and PPAs.

Shifting Trade Partnerships and Diversification

US unpredictability has prompted partners like India, the EU, and others to seek alternative trade relationships, including new deals with China. This diversification reduces US leverage, alters global trade flows, and impacts long-term market positioning for multinationals.

Defence exports and geopolitical positioning

Turkey’s defence industry is expanding exports and co-production, exemplified by a reported $350m arms agreement with Egypt and large-scale drone manufacturing capacity growth. This supports industrial upgrading and regional influence, but can elevate sanctions, licensing and reputational due-diligence requirements.

Automotive transition and investment flight

Auto suppliers warn of relocation: 72% are delaying, cutting or moving German investment; 64% cut jobs in 2025. EU CO₂ rules, EV competition and high energy prices drive restructuring. Supply chains should plan for capacity shifts and tier-2 insolvency risk.

Orta Koridor lojistik fırsatı

Trans-Hazar Orta Koridoru, Çin‑Avrupa transit süresini deniz yolundaki 35–50 günden 18–25 güne düşürebiliyor. Türkiye’nin demiryolu/liman bağlantıları, depolama ve gümrük verimliliği yatırımları önem kazanıyor; kapasite darboğazı ve sınır geçiş gecikmeleri operasyonel risk.

Rare earths processing and project pipeline

Government promotion of 49 mines and 29 processing projects, plus discoveries in gallium/scandium and magnet rare earths, supports Australia’s shift from raw exports to midstream processing. Opportunities are significant, but permitting, capex, and processing technology risk remain decisive.

Energy security via LNG contracting

With gas around 60% of Thailand’s power mix and domestic supply shrinking, PTT, Egat, and Gulf are locking in 15-year LNG contracts (e.g., 1 mtpa and 0.8 mtpa deals starting 2028). Greater price stability supports manufacturers, but contract costs and pass-through remain key.

Tax policy and capital gains timing

The federal government deferred implementation of higher capital gains inclusion to 2026, creating near-term planning windows for exits, restructurings, and inbound investment. Uncertainty over final rules still affects valuation, deal timing, and compensation design.

Trade controls and anti-circumvention squeeze

Sanctions are broadening beyond energy to metals, chemicals, critical minerals (over €570m cited), plus export bans on dual-use goods and services. New anti-circumvention tools may restrict exports to high‑risk transshipment hubs, tightening supply of machinery, radios, and industrial inputs to Russia-linked supply chains.

Biodiesel policy recalibration to B40

Indonesia delayed moving to B50 and will maintain B40 in 2026 due to funding and technical constraints. This changes palm-oil and diesel demand projections, affecting agribusiness margins, shipping flows, and price volatility across global edible oils and biofuel feedstock markets.

Labour Market and Immigration Shifts

The UK labour market is shaped by new immigration policies, skills shortages, and demographic trends. Restrictions on migrant mobility and evolving visa rules affect talent availability, wage pressures, and long-term economic growth.

Semiconductor Industry Policy Overhaul

South Korea passed a landmark law to strengthen its semiconductor sector, establishing a presidential commission and special funding. The law aims to secure technological leadership in AI chips, centralize support, and incentivize regional development, directly impacting global tech supply chains and investment flows.

Electricity contracts underpin competitiveness

Battery makers and other electro-intensive industries are locking in long-term power contracts with EDF; Verkor signed a 12-year deal alongside its Bourbourg gigafactory. Secured low-carbon electricity is becoming a key determinant of cost, investment viability, and export pricing.

Financial Sector Resilience and Growth Outlook

Israel’s economy demonstrates resilience, with strong currency performance, low unemployment, and robust growth forecasts for 2026. Rate cuts and potential normalization agreements could further boost foreign investment and exports, enhancing the country’s attractiveness for global investors.

AB Gümrük Birliği modernizasyonu

AB ve Türkiye, Gümrük Birliği’nin modernizasyonu için çalışmaları hızlandırma sinyali verdi; EIB’nin Türkiye’de operasyonlarına kademeli dönüşü de gündemde. Kapsamın hizmetler, tarım ve kamu alımlarına genişlemesi tedarik zinciri entegrasyonunu güçlendirebilir; takvim belirsiz.

Ports and rail logistics bottlenecks

Transnet’s recovery is uneven: rail volumes are improving, but vandalism and underinvestment keep capacity fragile. Port congestion—such as Cape Town’s fruit-export backlog near R1bn—threatens time-sensitive shipments, raises demurrage, and pushes costly rerouting across supply chains.

Tax audits and digital compliance

SAT is intensifying data-driven enforcement, including audits triggered from CFDI e-invoices alone, while offering a 2026 regularization program that can forgive up to 100% of fines and surcharges. Multinationals must harden vendor due diligence, invoice controls, and customs-tax consistency.

Red Sea routing volatility persists

Carrier reversals on Suez/Red Sea transits underscore persistent maritime insecurity and schedule unreliability. For U.S. importers and exporters, this implies longer lead times, higher inventory buffers, potential demurrage/warehousing costs, and fluctuating ocean capacity and rates.

Fiscal pressure and project sequencing

Lower oil prices and reduced Aramco distributions are tightening fiscal space, raising the likelihood of project delays, re-scoping and more PPP-style financing. International contractors and suppliers should plan for slower award cycles, tougher payment terms, and higher counterparty diligence.

Afghan border closures disrupt trade

Intermittent closures and tensions with Afghanistan are hitting border commerce, with KP reporting a 53% revenue drop tied to disrupted routes. Cross-border traders face delays, spoilage, and contract risk; Afghan moves to curb imports from Pakistan further threaten regional distribution channels.

Liquidity regime and Fed balance sheet

Debate over shrinking the Fed balance sheet versus maintaining ample reserves raises the probability of periodic money-market “jumps,” especially in repo and wholesale funding. Volatility tightens bank liquidity, raises hedging costs, and can propagate to global USD funding and trade finance.

Macroeconomic slowdown, FX sensitivity

The NBU cut the key rate to 15% while warning war damage reduces GDP growth to about 1.8% and pressures the balance of payments. Elevated uncertainty affects pricing, payment terms, working-capital needs, and currency hedging for importers and exporters.

Critical minerals alliance reshaping

Canberra’s A$1.2bn Critical Minerals Strategic Reserve (initially gallium, antimony, rare earths) and deeper US-led cooperation (price floors, offtakes) are accelerating non‑China supply chains, creating investment openings but higher compliance, geopolitical and pricing-policy risk for manufacturers.

Nickel Policy Drives Global Supply Chains

Indonesia’s tightening of nickel ore production quotas and crackdown on illegal mining directly impacts 65% of global supply. These moves, aimed at boosting domestic processing, create volatility in battery and EV supply chains and influence global commodity prices.

Energy security and LNG contracting

Shrinking domestic gas output and delayed petroleum-law amendments increase reliance on LNG; gas supplies roughly 60% of power generation. PTT, Egat and Gulf are locking long-term LNG deals (15-year contracts, 0.8–1.0 mtpa). Electricity-price volatility and industrial costs remain key.

Hormuz maritime security volatility

Escalating U.S.–Iran tensions include tanker seizures and discussion of maritime interdictions. Any incident near the Strait of Hormuz can spike energy prices, delay shipments, and raise war-risk premiums. Businesses should stress-test logistics, bunker costs, and force-majeure exposures.

Expanding U.S. secondary penalties

Washington is tightening enforcement on Iranian trade through new sanctions targeting oil/petrochemical networks and a 25% tariff threat on countries trading with Iran. This elevates compliance costs, raises counterparty risk, and may force rapid supplier requalification.

Central bank pivot and rate path

The Bank of Thailand is shifting from rate-only signalling toward broader measures targeting productivity and inequality, while maintaining accommodative policy. Analysts expect a possible cut toward 1.00% in early 2026. Lower rates help borrowers but may not revive investment without reforms.

Regional connectivity projects at risk

Strategic infrastructure tied to Iran, such as Chabahar/INSTC routes, faces uncertainty as partners reconsider funding under U.S. pressure and expiring waivers. This threatens diversification of Eurasian supply corridors, increasing reliance on other routes and reducing redundancy for time-sensitive cargo.

Energy Security and Long-Term LNG Deals

Japan secured a 27-year LNG supply agreement with Qatar, ensuring stable energy for power generation and industrial growth. This move supports Japan’s energy transition and mitigates risks from volatile global markets, benefiting sectors like data centers and advanced manufacturing.

Fiskalpolitik und Verfassungsklagen

Schuldenfinanzierte Sondervermögen treiben einen Großteil des Wachstums, zugleich drohen Rechtsrisiken: Die Grünen prüfen Verfassungsbeschwerden gegen Haushalt und Mittelverwendung. Unternehmen müssen mit Verzögerungen bei Infrastruktur- und Klimaprojekten, Förderunsicherheit sowie wechselnden Steuer- und Ausgabenprioritäten rechnen.

Foreign Investment Scrutiny Intensifies

Australian authorities are tightening scrutiny of foreign investment, especially in strategic sectors like rare earths. Recent government actions to force divestment of Chinese-linked stakes in Northern Minerals reflect heightened national interest concerns, affecting deal certainty for international investors.

Energy security via long LNG

Japan is locking in long-duration LNG supply, including a 27-year JERA–QatarEnergy deal for ~3 Mtpa from 2028 and potential Japanese equity in Qatar’s North Field South. This supports power reliability for data centers/semiconductors but reduces fuel flexibility via destination clauses.

Monetary policy and dollar volatility

Cooling inflation (CPI 2.4% y/y in January; core 2.5%) is shifting expectations toward midyear Fed cuts. Rate and FX swings affect working capital, hedging, and investment hurdle rates, while tariff-driven relative price changes alter import demand and margins.