Mission Grey Daily Brief - January 10, 2025
Summary of the Global Situation for Businesses and Investors
The global situation remains complex and volatile, with several geopolitical and economic developments that could impact businesses and investors. The Ukraine-Russia war continues to be a major concern, with Donald Trump pushing back the war deadline and the US pledging $500 million in weapons and ammunition for Kyiv. Meanwhile, North Korea's involvement in the war and Donald Trump's threats over Greenland and Ukraine could have significant implications for NATO. In the Middle East, the US has imposed sanctions on Sudan's Rapid Support Forces (RSF) and its leader, Mohamed Hamdan Dagalo, over allegations of genocide and human rights abuses. Lastly, the US is building a Pacific island fortress against China, indicating a potential escalation in tensions between the two countries.
Ukraine-Russia War
The Ukraine-Russia war remains a significant concern for businesses and investors, with Donald Trump pushing back the war deadline and the US pledging $500 million in weapons and ammunition for Kyiv. This development could have a positive impact on the Ukrainian economy, as it will provide much-needed support for the country's military and help to stabilise the situation. However, it is important to note that the war is far from over, and the situation remains highly volatile. Businesses and investors should continue to monitor the situation closely and be prepared for potential risks and opportunities.
North Korea's Involvement in the Ukraine-Russia War
North Korea's involvement in the Ukraine-Russia war is a significant development that could have far-reaching implications for the region. Nearly 12,000 North Korean soldiers have been training in Russia and fighting in the Kursk region, and the country is "significantly benefiting" from receiving Russian military equipment, technology, and experience. This development could lead to an increase in North Korea's military capabilities and willingness to engage in military conflicts with its neighbours. Businesses and investors should be aware of the potential for increased tensions in the region and the possibility of further military action by North Korea.
Donald Trump's Threats over Greenland and Ukraine
Donald Trump's threats over Greenland and Ukraine could have significant implications for NATO. Trump has called for NATO allies to spend 5% of their national income on defence, which could plunge European governments into crisis mode. Additionally, Trump has threatened to seize Greenland by force, which could undermine the alliance's founding principle of Article 5. This development could lead to a rift within NATO and legitimise Russia's invasion of Ukraine. Businesses and investors should be aware of the potential for increased tensions within NATO and the possibility of further military action by Russia.
US Sanctions on Sudan's Rapid Support Forces (RSF)
The US has imposed sanctions on Sudan's Rapid Support Forces (RSF) and its leader, Mohamed Hamdan Dagalo, over allegations of genocide and human rights abuses. This development could have a significant impact on the Sudanese economy, as it will limit the country's ability to access international financial markets and trade. Additionally, the sanctions could lead to further instability in the region, as the RSF is a powerful paramilitary group that controls roughly half of the country. Businesses and investors should be aware of the potential for increased risks in the region and the possibility of further sanctions or military action by the US.
Further Reading:
America is building an impregnable Pacific island fortress against China - The Telegraph
Charlie Kirk Says Greenland Is Ready and Willing for a Trump Invasion - The Daily Beast
Donald Trump pushes back Ukraine war deadline in sign of support for Kyiv - Financial Times
Donald Trump's threats over Greenland and Ukraine could be a make-or-break test for NATO - Sky News
Keith Kellogg predicts Trump will accomplish 'near-term' solution to Russia-Ukraine war - Fox News
North Korea benefiting from troops fighting alongside Russia, US warns - The Independent
Russia is alarmed by Trump's Greenland plan - but it could work in the Kremlin's favour - Sky News
Themes around the World:
Industrial and Technological Investment Surge
France is witnessing major investments in aerospace, steel decarbonization, data centers, and sustainable manufacturing. Projects totaling billions of euros aim to create thousands of jobs, modernize infrastructure, and strengthen France’s position in global supply chains.
EU Tariffs Reshape Swedish Industry
The introduction of new EU tariffs has driven a 60% surge in SSAB’s stock and increased regionalization in Sweden’s steel sector, strengthening domestic producers but raising costs for importers and supply chain partners across Europe.
China's Domestic Consumption Growth
Despite external pressures, China's expanding middle class and domestic consumption offer growth opportunities for consumer goods and services sectors, attracting foreign investment focused on the Chinese market.
Weak Economic Growth and Fiscal Strain
Thailand’s GDP growth is forecast at 1.5–2.0% for 2026, its weakest in three decades. High public and household debt, slow reforms, and political uncertainty threaten credit ratings, investment sentiment, and the government’s ability to stimulate recovery.
Critical Minerals Geopolitics Intensifies
Australia’s dominance in lithium, nickel, and rare earths positions it at the heart of global supply chain security for green technologies. Strategic partnerships and resource nationalism are rising, with ethical and environmental governance under scrutiny for international investors.
Mercosur Agreement Sparks Turmoil
France’s opposition to the EU-Mercosur trade agreement has triggered nationwide farmer protests and political threats, reflecting deep fears of unfair competition and lower standards. The deal’s ratification could reshape European agriculture, supply chains, and trade flows.
Agricultural Policy and Trade Negotiations
France's agricultural sector faces challenges from EU trade agreements and environmental regulations. Protectionist measures and subsidy reforms influence global agricultural trade patterns, impacting exporters and importers reliant on French produce and affecting commodity supply chains.
Vision 2030 Economic Diversification Drive
Saudi Arabia continues to shift from oil dependency by investing in sectors like tourism, technology, mining, and renewable energy. Vision 2030 reforms drive non-oil GDP growth, foster innovation, and create new opportunities for international trade and supply chain integration.
Political Uncertainty and Labour Leadership
Upcoming local elections and internal Labour debates over Brexit reversal and EU alignment create political instability. Leadership challenges and policy shifts could alter the UK’s trade, investment, and regulatory environment, affecting business confidence.
Supply Chain Resilience and Restructuring
Global supply chain uncertainties, especially in semiconductors and advanced manufacturing, are prompting Korean firms to invest in local capacity and diversify sourcing. This trend enhances resilience but requires ongoing adaptation to geopolitical shocks, regulatory changes, and technology competition.
Supply Chain Resilience Initiatives
Japan is actively promoting supply chain resilience through diversification and reshoring efforts, especially in critical industries like semiconductors and automotive parts. This shift aims to reduce dependency on China and Southeast Asia, impacting global supply networks and investment flows into Japan's manufacturing sector.
AI and Technology Sector Drives Growth
Japan’s Nikkei index surged past 50,000, fueled by an AI boom and robust tech sector earnings. While optimism remains, risks from global economic slowdowns and supply chain disruptions could temper growth, affecting tech investments and innovation strategies.
Gaza Ceasefire and Governance Transition
Israel’s business environment is shaped by the US-led Gaza ceasefire plan, which introduces a technocratic Palestinian administration and international oversight. Uncertainty over Hamas disarmament, Israeli withdrawal, and reconstruction funding creates significant operational and investment risks for international firms.
Collapse in Russian Energy Revenues
Russian oil exports have plunged by 440,000 barrels daily, with Urals crude prices falling below $35 per barrel. Energy income now accounts for only 23% of Russia’s budget, down from over 50%, threatening fiscal stability and investment attractiveness.
Mining Sector Expansion
Australia's mining industry is experiencing growth driven by global demand for critical minerals such as lithium and rare earth elements. This expansion attracts foreign investment but also raises environmental and regulatory challenges impacting operational costs and timelines.
Foreign Investment Regulations
Stricter foreign investment screening measures have been implemented to safeguard national security and critical infrastructure. These regulations impact inbound capital flows, especially from China, influencing investor confidence and prompting multinational corporations to reassess their investment strategies in Australia.
Aerospace Sector’s Trade Surplus and Tax Risks
The French aerospace industry, generating €77.7 billion in 2024 and a €30 billion trade surplus, is vital for exports and employment. Industry leaders warn that higher taxation or regulatory burdens could undermine competitiveness, with ripple effects on supply chains and France’s trade position.
Brexit Frictions Persist For Trade
Despite minor resets, the UK’s refusal to rejoin the EU single market or customs union continues to cause significant trade friction, with Brexit estimated to have reduced GDP by 6-8%. Ongoing barriers hamper supply chains and investment flows, limiting economic recovery.
Semiconductor Industry Strategic Dominance
Taiwan’s leadership in advanced semiconductor manufacturing, exemplified by TSMC’s 2nm chip mass production, remains critical to global technology supply chains. Geopolitical tensions and potential disruptions pose significant risks to international business operations and AI sector investment strategies.
Commodity Export Restrictions
Indonesia's implementation of export restrictions on key commodities like nickel and palm oil aims to boost domestic processing industries. This policy disrupts global supply chains, increases raw material costs for international manufacturers, and compels investors to reassess risk exposure in Indonesia's resource sectors.
US Sanctions and Economic Pressure
Ongoing US sanctions continue to severely restrict Iran's access to international financial systems, limiting foreign investment and complicating trade. These sanctions target key sectors like oil, banking, and shipping, increasing operational risks for international businesses and disrupting supply chains reliant on Iranian exports and imports.
Technological Innovation and Investment
Japan’s focus on advanced technologies such as semiconductors, robotics, and green energy drives significant investment opportunities. Government incentives and private sector R&D enhance Japan’s competitive edge, influencing global tech supply chains and attracting foreign direct investment in high-tech industries.
Labor Reforms and Wage Increases
Mexico implemented a 13% minimum wage hike in 2026, expanded social security for platform workers, and is debating a reduction in the workweek. These reforms aim to improve labor conditions but may increase operational costs and require business adaptation, especially for SMEs.
Japanese Yen Volatility and Monetary Policy
The yen’s volatility, driven by cautious Bank of Japan tightening and external shocks, impacts trade competitiveness and investment returns. Currency fluctuations and rising bond yields require international firms to hedge exposures and monitor policy signals closely.
Infrastructure Megaprojects Drive Growth
Large-scale projects such as NEOM and Red Sea developments are reshaping Saudi Arabia’s business landscape, creating opportunities in construction, tourism, logistics, and technology. However, project execution risks and regulatory changes require vigilant risk management for global partners.
Geopolitical Tensions and Security Risks
North Korea’s military provocations, nuclear submarine development, and evolving US-South Korea alliance dynamics heighten regional security risks. Businesses must assess exposure to geopolitical disruptions, supply chain vulnerabilities, and shifting defense priorities in Northeast Asia.
Currency Volatility and Economic Stability
Fluctuations in the Indonesian rupiah and macroeconomic uncertainties pose financial risks for foreign investors and traders. Currency volatility affects cost structures, pricing strategies, and profitability, necessitating robust financial risk management frameworks.
Tax Threshold Freeze Hits Incomes
The UK government's extension of the income tax threshold freeze until 2031 will push 4.2 million more people into higher tax brackets, reducing real post-tax income for middle-income earners by over £500 annually, impacting consumer demand and business margins.
AI and Data Center Infrastructure Expansion
Driven by global hyperscaler investment, South Korea is rapidly expanding AI and data center infrastructure. Government plans to triple AI spending and attract major tech firms are accelerating sector growth, supporting innovation but also intensifying competition for talent and resources.
Global Competition for Critical Minerals
Australia is central to G7-led efforts to diversify global critical minerals supply chains, countering China’s dominance. International collaboration and investment in Australian mining and processing are accelerating, with implications for technology, defense, and clean energy industries worldwide.
Risks From Global Trade Tensions
Vietnam’s open economy is vulnerable to US and EU tariff measures, origin fraud scrutiny, and global demand fluctuations. Heavy dependence on major markets like the US and China poses risks, prompting efforts to diversify exports and strengthen regulatory compliance.
USMCA Uncertainty and Trade Tensions
The upcoming review of the USMCA agreement injects significant uncertainty into North American trade. Potential renegotiations or expiration could disrupt tariff-free access, supply chains, and investment planning, with heightened risks from ongoing US protectionist rhetoric and tariff threats.
Escalating US-China Trade Tensions
The US has imposed tariffs up to 17% on Chinese imports, leading to a 20% drop in China’s exports to the US and accelerating supply chain diversification. These tensions disrupt global trade flows and increase operational uncertainty for multinationals.
Geopolitical Risks and Strategic Autonomy
Heightened US-China tensions and US assertiveness in Latin America create uncertainty for Brazil’s trade and investment environment. Brazil’s strategy of balancing relations with both powers, while leveraging its energy and mineral resources, is critical for business resilience.
Energy Supply Instability
South Africa faces ongoing energy supply challenges due to frequent power outages and load shedding by Eskom. This instability disrupts manufacturing and logistics, increasing operational costs and deterring foreign investment. Businesses must factor in energy risks when planning supply chains and capital expenditures.
Supply Chain Realignment To Vietnam
Vietnam’s strategic location and integration into FTAs have made it a preferred destination for supply chain shifts, especially from China and other Asian economies. This trend enhances Vietnam’s industrial capacity and global competitiveness, but also increases exposure to external shocks.