Mission Grey Daily Brief - January 09, 2025
Summary of the Global Situation for Businesses and Investors
The global situation is marked by escalating tensions and shifting geopolitical dynamics. Khamenei is pushing for a US withdrawal from Iraq, while Trump's expansionist agenda and threats of military action in Panama and Greenland are causing concern. Tensions between China and Taiwan are rising, with Taiwan demonstrating its sea defenses and China conducting wargames. Meanwhile, the US warns of North Korea's growing military capabilities due to its alliance with Russia in the Ukraine war. The Sudanese civil war continues, with the US imposing sanctions on the Rapid Support Forces (RSF) and allied militias for genocide.
Trump's Expansionist Agenda and Threats of Military Action
Donald Trump, the President-elect of the United States, has been making controversial statements regarding acquiring Greenland and the Panama Canal, refusing to rule out military action to secure these territories. Trump has also criticised NATO allies for not contributing sufficiently to the alliance, demanding a significant increase in defence spending to 5% of GDP. This has led to a rally in European defence stocks, with shares in defence companies rising as markets anticipate increased defence budgets.
Trump's aggressive foreign policy and threats of military action have raised concerns among European nations and Canada. Denmark, France, and Germany have responded to Trump's interest in Greenland, with Denmark symbolically reaffirming its sovereignty over the territory. Canada's Minister of Foreign Affairs, Melanie Joly, has rejected Trump's comments, stating that Canada will not back down in the face of threats.
Rising Tensions Between China and Taiwan
Tensions between China and Taiwan are escalating, with Taiwan demonstrating its sea defenses against a potential Chinese attack. Taiwan's navy showcased its fast attack missile boats and corvettes near Kaohsiung, a major international trade hub. This display is part of Taiwan's strategy to deter a Chinese invasion, as it relies on its flexible defense capabilities to counter the larger Chinese military.
China routinely challenges Taiwan's defenses, sending ships and planes to test Taiwan's willingness and ability to respond. Taiwan has demanded an end to China's military activity in nearby waters, citing disruptions to international shipping and trade. The authoritarian Chinese government has refused communication with Taiwan's pro-independence governments since 2016, and there are concerns about a potential military escalation.
North Korea's Growing Military Capabilities and Alliance with Russia
The US has warned that North Korea is significantly benefiting from its alliance with Russia in the Ukraine war. Nearly 12,000 North Korean soldiers have been training in Russia and gaining battlefield experience by fighting alongside Russian forces. This has enhanced North Korea's military capabilities and increased its potential to wage war against its neighbours, such as South Korea and Japan.
The US and the UK have criticised North Korea's leader, Kim Jong Un, for sending soldiers to fight in a foreign war. The alliance between North Korea and Russia was strengthened by a strategic defence treaty signed during Putin's state visit to Pyongyang in 2024. This treaty commits both countries to mutual aid in the event of armed conflict.
Sudanese Civil War and US Sanctions
The Sudanese civil war continues to create a humanitarian crisis, with UN agencies struggling to deliver relief. The US has determined that the Rapid Support Forces (RSF) and allied militias have committed genocide in the conflict, killing tens of thousands and displacing millions. The US has imposed sanctions on the RSF leader, Mohamed Hamdan Dagalo, and seven RSF-owned companies based in the United Arab Emirates, freezing their assets and barring them from US travel.
The RSF has rejected these measures, denying harm to civilians and attributing violence to rogue actors. The US Secretary of State, Antony Blinken, has condemned the RSF's actions, stating that they bear command responsibility for abhorrent and illegal actions. The RSF's attempts to assert legitimacy and install a civilian government have been undermined by these sanctions.
Further Reading:
A Near-Nuclear Iran Awaits Trump - AOL
Before Trump scoops up Canada, he’s eyeing up Greenland: Watters - Fox News
China’s latest Taiwan wargame established a strategic position before Trump arrives - The Telegraph
Denmark, France and Germany respond to Trump sizing up Greenland - CGTN
Jamenei presiona por la retirada estadounidense de Irak en reunión con Sudán - Al-Monitor
Khamenei pushes for US withdrawal from Iraq in meeting with Sudani - Al-Monitor
Trump will not rule out using military force to take Panama Canal, Greenland - FRANCE 24 English
Trump's Greenland and NATO comments spark defence stocks rally - Euronews
US determines Sudan’s RSF committed genocide, imposes sanctions on leader - Sight Magazine
Themes around the World:
FCA enforcement transparency escalation
The FCA’s new Enforcement Watch increases near-real-time visibility of investigations and emphasises individual accountability, Consumer Duty “fair value”, governance and controls. Online brokers and platforms should expect faster supervisory escalation and higher reputational and remediation costs.
Monetary policy volatility persists
Bank Rate held at 3.75% after a narrow 5–4 vote, with inflation around 3.4% and cuts debated for March–April. Shifting rate expectations affect sterling, refinancing costs, property and M&A valuations, and working-capital planning for importers and exporters.
US–China trade realignment pressure
South Africa is navigating rising US trade frictions, including 30% tariffs on some exports and lingering sanctions risk, while deepening China ties via a framework/early-harvest deal promising duty-free access. Firms should plan for rules-of-origin, retaliation and market diversification.
Tighter tax audits and customs scrutiny
SAT is intensifying enforcement against fake invoicing and trade misvaluation, using CFDI data to trigger faster audits and focusing on import/export inconsistencies and improper refunds. Compliance burdens rise for multinationals, making vendor due diligence, transfer pricing and customs documentation more critical.
Rising cyber risk and compliance
La stratégie nationale cybersécurité 2026-2030 répond à un record de 348 000 atteintes en 2025 (+75% en cinq ans). Priorités: formation, sécurisation technologique, préparation de crise, mobilisation du privé et réduction des dépendances, renforçant obligations fournisseurs et audits.
Infrastructure capex boosts logistics
Economic Survey signals sustained infrastructure push via PM GatiShakti and high public capex. Rail electrification reached 99.1% by Oct 2025; inland water cargo rose to 146 MMT in FY25; ports improve global rankings—lowering transit times and costs.
Carbon Market Regulation and Opportunities
Brazil is preparing to launch a regulated carbon credit market by 2030, unlocking significant investment in forest conservation, renewable energy, and agriculture. This regulatory shift will drive demand for carbon credits, impacting polluting industries and boosting international climate finance flows.
Reforma laboral: semana de 40 horas
Avanza la reforma constitucional para reducir la jornada a 40 horas (implementación gradual 2026‑2030), sin bajar salarios y con cambios en horas extra y registro electrónico. Implica presión de costos, rediseño de turnos y productividad en manufactura, logística y servicios.
Trade balance strain with neighbors
Pakistan’s trade deficit with nine neighbors widened 44.4% to $7.68bn in H1 FY26, driven by import growth (notably China) and weaker exports. This pressures FX demand and can prompt import management measures affecting raw materials and intermediate goods availability.
New trade deals and friend-shoring
US is using reciprocal trade agreements to rewire supply chains toward strategic partners. The US–Taiwan deal caps many tariffs at 15%, links chip treatment to US investment, and includes large procurement and investment pledges, influencing regional manufacturing footprints and sourcing decisions.
Trade competitiveness and tariff headwinds
Businesses warn of weak exports and tariff pressures, including potential U.S. measures affecting regional trade. Firms should expect tougher price competition versus Vietnam and Malaysia and prioritize rules-of-origin compliance, diversification of end-markets, and scenario planning for new trade barriers.
Power-demand surge from AI buildout
Rising electricity demand from data centers and semiconductor fabs is explicitly cited in LNG procurement plans. This increases exposure to grid constraints, permitting timelines, and power-price volatility, influencing site selection, capex schedules, and long-term PPAs for foreign investors.
Treasury market liquidity drains
Large Treasury settlements and heavy auction calendars can pull cash onto dealer balance sheets, reducing liquidity elsewhere. Tightened repo and margin dynamics raise volatility across risk assets, complicate collateral management, and increase the chance of disruptive funding squeezes for corporates.
Tax and cost-base reset
Budget-linked measures raise employer National Insurance to 15% (from April 2025) and change pension salary-sacrifice NI from 2029/30, expected to raise £4.8bn initially. Combined with business-rates changes, this tightens margins and alters location, hiring, and pricing strategies.
Surge in Foreign Direct Investment
FDI inflows to India rose 73% to $47 billion in 2025, driven by services and manufacturing. Sustaining this growth requires policy stability, targeted reforms, and improved ease of doing business, as global volatility and competition from Vietnam and Malaysia intensify.
Dependência de China em commodities
A China ampliou compras de soja brasileira por vantagem de preço e incertezas tarifárias EUA–China. Essa concentração sustenta exportações, mas aumenta exposição a mudanças regulatórias chinesas, logística portuária e eventos climáticos, afetando contratos de longo prazo.
Weak growth and deindustrialisation
Germany’s economy remains stuck near 2019 output with private investment down ~11% since 2019 and unemployment above 3 million. Persistent cost, regulation and infrastructure constraints are pressuring manufacturing footprint decisions, supplier stability and demand forecasts.
Electricity reform and tariff shock
Eskom restructuring remains contested, but Ramaphosa reaffirmed an independent transmission entity and 2026 transmission tenders. Meanwhile Nersa-approved hikes of ~8.8% in 2026/27 and 2027/28 raise input costs, affecting energy-intensive industry, pricing and investment.
State-led investment via Danantara
Danantara is centralizing SOE assets and launching about US$7bn in downstream “hilirisasi” projects, while signaling possible market interventions and strategic acquisitions. The model can accelerate infrastructure and processing capacity, but raises governance, competition, and expropriation-perception risks for foreign partners.
Black Sea conflict logistics risk
Ongoing Russia–Ukraine war sustains elevated Black Sea war‑risk premia, periodic port disruption, and vessel damage reports. Businesses face higher insurance, longer routes, unpredictable inspection or strike risk, and tougher contingency planning for regional supply chains.
Tech investment sentiment and resilience
Israel’s innovation ecosystem remains a core investment draw, but conflict-linked volatility and talent constraints influence funding conditions and valuations. Companies should stress-test R&D continuity, cyber risk, and cross-border collaboration, while watching for policy incentives supporting strategic sectors.
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.
Tariff volatility and legal risk
Rapidly changing tariffs—autos, aircraft, semiconductors and broad “reciprocal” measures—are being tested in courts, including Supreme Court scrutiny of emergency-authority tariffs. This creates pricing uncertainty, contract disputes, and prompts inventory front‑loading and supply-chain reconfiguration.
US Trade Policy Realignment Accelerates
Recent US trade policy shifts, including new tariffs and renegotiated agreements, are reshaping global commerce. These changes drive uncertainty in cross-border operations, impacting supply chain strategies and international investment decisions for multinational firms.
Nearshoring Momentum and Supply Chain Shifts
Mexico’s role as a nearshoring hub is accelerating, driven by US-China tensions and global supply chain recalibration. Firms are relocating manufacturing to Mexico for resilience, but face challenges including labor shortages, infrastructure gaps, and regulatory complexity.
Maritime regulation and Jones Act rigidity
Court affirmation and continued political support for the Jones Act sustain high domestic coastal shipping costs and limited capacity for inter-U.S. moves. Energy, agriculture, and construction inputs may face higher delivered costs, affecting project economics and intra-U.S. supply-chain design.
Financial sector tightening and de-risking
Sanctions expansion to ~20 additional regional banks plus crypto platforms used for circumvention increases payment friction. International counterparties face higher KYC/AML burdens, blocked settlements, and trapped receivables, accelerating “de-risking” by global banks and insurers.
Permitting and local opposition hurdles
Large battery projects face heightened scrutiny on safety and environmental grounds. In Gironde, the €500m Emme battery project on a high-Seveso site drew calls for independent risk studies, signalling potential delays, added mitigation costs and reputational risks for investors and suppliers.
Shadow fleet interdictions and safety
France’s boarding of the GRINCH and allied moves to seize or detain shadow‑fleet tankers signal a shift from monitoring to physical enforcement. Aging, falsely flagged ships elevate spill, detention and force‑majeure risk for shippers, insurers, and terminals.
Green Transition and Sustainable Investment Projects
Major projects like the $4.2 billion Giza waste-to-biofuel facility highlight Egypt’s commitment to green growth and the circular economy. Such initiatives create new investment opportunities, support job creation, and align with global sustainability standards, attracting ESG-focused investors.
Nonbank credit and private markets substitution
As banks pull back, private credit and direct lenders fill financing gaps, often at higher spreads and with tighter covenants. This shifts refinancing risk to less transparent markets, raising cost of capital for midmarket firms that anchor US supply chains and overseas procurement networks.
US–Indonesia reciprocal tariff deal
Jakarta and Washington say negotiations on a reciprocal tariff agreement are complete and await presidential signing. Reports indicate US duties on Indonesian exports fall from 32% to 19%, while Indonesia removes tariffs on most US goods and may accept clauses affecting digital trade and sanctions alignment.
Geopolitical Risks and Trade Diversification
Turkey faces challenges from shifting global alliances, new EU and India FTAs, and regional tensions. Trade with India declined by over 14% in 2024–25, and exclusion from new FTAs limits market access, highlighting the need for diversified export strategies.
USMCA review and tariff risk
The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.
Property slump and financial spillovers
China’s housing correction continues to depress demand and strain credit. January new-home prices fell 3.1% y/y and 0.4% m/m, with declines in 62 of 70 cities. Persistent developer debt and bank exposures weigh on consumption, payments risk, and counterparty reliability across B2B sectors.
Dollar hedging costs surge
Foreign investors are increasing USD hedge ratios, amplifying dollar swings even without mass Treasury selling. Higher FX-hedging costs reshape portfolio allocation, pricing of long-term supply contracts, and can reduce inward investment appetite while raising working-capital volatility for importers.