FDI screening recalibrated, expedited

India has clarified Press Note 3 FDI screening: non-controlling beneficial ownership from land-border countries up to 10% can use the automatic route (with disclosure), while select manufacturing proposals target 60-day decisions, shaping deal certainty and JV timelines.

China rare-earth controls escalate

China has shifted to targeted dual-use export controls affecting Japanese firms, including rare earths, raising input risk for EVs, electronics and defense. Japan pursues ‘zero-dependence’ steps by 2028 via recycling, stockpiles, offshore partners and deep-sea mining pilots.

Housing correction and financial oversight

Falling condo valuations and tighter OSFI scrutiny of “blanket” appraisals raise mortgage and developer risk, with potential knock-on effects for bank credit conditions. International investors should expect stricter underwriting, slower project financing, and more conservative counterparty behavior in real estate-linked sectors.

Agriculture protectionism in trade deals

India is prioritizing farmer protection in trade negotiations, refusing tariff concessions on sensitive items such as sugar, dairy, and GM crops. This limits market access for foreign agri exporters, affects F&B input strategies, and increases policy volatility around export/import curbs.

IMF-linked reforms and price hikes

Under the IMF-backed programme, authorities are accelerating subsidy rationalisation, including fuel increases up to ~30% and tighter energy-demand controls. These measures improve fiscal metrics but raise transport and input costs, affecting consumer demand, wage expectations, and margins across supply chains.

Sanctions volatility and enforcement risk

Western sanctions remain dynamic, with stepped-up targeting of shipping, insurance and intermediaries. Recent temporary waivers and political disputes over new EU packages increase compliance uncertainty, heightening due-diligence costs, contract risk, and potential secondary-sanctions exposure for traders, banks, and logistics providers.

Currency, rates, liquidity management

The State Bank pledges flexible policy as external shocks and oil-driven inflation pressures grow. Credit outstanding reached 18.86 quadrillion VND by Feb 26 (+1.4% since end‑2025). The interbank exchange rate averaged 26,044 VND/USD end‑Feb (0.94% stronger vs end‑2025), but funding conditions can tighten quickly.

FDI outflows and changing investor mix

TEPAV data show net FDI outflow of about $0.9bn in Q4 2025 ($1.8bn inflows vs $2.7bn outward), despite more foreign-company formations. Investors concentrate in manufacturing and trade; shifting sources and weaker sentiment can affect deal pipelines and valuations.

Tightening AML, crypto and transparency

Post-greylist, regulators are intensifying AML/CFT enforcement: crypto “travel rule” implementation, tighter SARS reporting, and proposed fines up to 10% of turnover for beneficial-ownership noncompliance. This raises due diligence, onboarding, KYC and data-governance costs, but improves banking and partner-risk perceptions.

Oil market volatility and fiscal impact

Oil prices surged amid regional attacks and shipping constraints, while Saudi finances face lower oil revenues and a larger 2025 deficit (SR276bn). Volatility affects energy‑intensive industries, FX/liquidity planning, government spending cadence, and contracting risk for suppliers tied to public projects.

Industrial policy and reshoring push

The 2026 Trade Policy Agenda prioritizes domestic production, stricter rules-of-origin, anti-transshipment enforcement, and supply-chain reshoring in critical minerals, semiconductors, pharmaceuticals, metals, and energy tech. This accelerates North America localization and raises compliance and capex requirements for multinationals.

Volatile rates, inflation, FX

Copom started easing with a cautious 25bp Selic cut to 14.75% after holding 15%, stressing Middle East oil-shock risks. Oil above US$100 can add ~0.25pp per 10% to IPCA, affecting hedging, pricing, and capital flows.

Energy-price shock exposure via gas

Despite power resilience, France remains exposed to gas-market spikes through indexed contracts and industrial feedstock costs. Around 60% of gas subscribers are on indexed offers; Bercy expects impacts from May, typically under €10/month for households, but higher for energy-intensive firms.

Sanctions volatility reshaping energy trade

OFAC issued short-term licenses allowing delivery of Russian oil already at sea to stabilize markets amid Middle East disruptions, alongside broader enforcement pressure. Energy traders, shippers and insurers face rapidly shifting compliance, freight rates and counterparty risk across routes and hubs.

Korea–Japan supply chain rapprochement

Seoul and Tokyo agreed to regular trade and economic-security dialogues and signed a Supply Chain Partnership Arrangement, plus LNG swap cooperation. This reduces disruption risk in critical minerals and components, but raises compliance expectations for coordinated export controls.

US Tariff Volatility for Textiles

US tariff shifts and parity disputes with India/Bangladesh create order uncertainty for Pakistan’s largest export market. With textiles dominant in exports, small tariff differentials can redirect sourcing. Firms should diversify markets and build flexibility into contracts and inventory planning.

Lira volatility and inflation

Inflation remains elevated (31.5% y/y in February) and geopolitical shocks have forced tight liquidity; Turkey reportedly spent $12bn defending the lira. FX instability raises pricing risk, working-capital needs, hedging costs, and import affordability for energy and inputs.

Regional war escalates operational risk

Israel’s widened confrontation with Iran sustains elevated security, airspace, and business-continuity risk. Expect intermittent disruption to flights and critical infrastructure, higher war-risk insurance and security costs, tighter SLAs, and greater force-majeure risk in cross-border contracts.

Energy security policy and regulation

Government responses include oil‑reserve releases (Germany plans ~2.4m barrels) and possible limits on daily fuel price hikes plus stronger antitrust powers. Debate over long‑term gas contracts, storage rules, and even fracking adds regulatory volatility for energy users and investors.

IMF Programme and Fiscal Tightening

Delayed IMF staff-level agreement keeps a $1bn tranche uncertain, raising rollover and reserve risks. Likely spending cuts, tax hikes and governance conditions will affect demand, pricing, import capacity and investor confidence, influencing deal timing and payment risk.

Asian refining and petrochemical shock

Hormuz disruption has cut Middle East crude and naphtha supplies, prompting refineries and steam crackers across Asia to reduce runs and declare force majeure. With over 60% of naphtha sourced from the Middle East, downstream shortages and price spikes can cascade into plastics, chemicals, and manufacturing supply chains.

Sovereign wealth and governance shift

Prabowo is pushing a high-growth agenda alongside a new sovereign wealth vehicle (Danantara, touted at $50bn annual returns) while attacking oligarch corruption. Markets remain wary after equity volatility and negative outlooks, raising governance due diligence needs for partners.

Ruble policy and import inflation

Budget-rule adjustments and FX interventions influence ruble volatility, with pass-through to import costs and inflation. For foreign firms still exposed, this raises pricing, working-capital and repatriation risks, and complicates local sourcing versus import decisions.

Rare earths and China controls

China’s shift toward targeted export controls against Japanese firms, including dual-use items and rare earths, raises input and compliance risk for electronics, defense, and automotive supply chains. Japan is pursuing US cooperation and alternative sourcing to reduce coercion exposure.

Energy grid under sustained attack

Russia’s winter‑spring missile and drone campaign is repeatedly hitting generation, substations, heating and water systems, triggering rolling outages and emergency cuts. This raises operational downtime, damages assets, lifts insurance and security costs, and disrupts industrial output and services nationwide.

Migration rules tighten for settlement

Government proposes extending Indefinite Leave to Remain from five to 10 years, potentially applied retrospectively, with higher English and tax-history requirements but fast tracks for top earners and NHS roles. Talent attraction, staffing costs, and project continuity risks rise for internationally mobile employers.

Labor law expansion raises disruption

The “Yellow Envelope” amendments broaden employer responsibility and subcontractor bargaining rights, triggering large-scale negotiation demands across industries. Businesses face higher risk of overlapping bargaining units, slower restructuring and automation decisions, and increased strike incidence—especially in manufacturing and logistics.

Black Sea and port operations

Odesa-region port, industrial and utility assets were damaged by drone strikes, yet Ukraine maintains a coastline-hugging shipping corridor with strict time windows, inspections and shutdowns. Exporters face schedule volatility, congestion, and elevated war‑risk premiums.

Doctrine “Made in Europe”

La nouvelle doctrine européenne de “préférence européenne” conditionne aides et marchés publics à des contenus produits en Europe (ex. 70% composants VE). Elle reconfigure sourcing, localisation industrielle, M&A et accès aux subventions pour acteurs extra-UE.

US-Taiwan Strategic Alignment Deepens

Closer economic and investment ties with the US are reinforcing Taiwan’s role in trusted technology and supply-chain networks. Expanded US corporate investment and policy support can attract capital, but they may also sharpen exposure to cross-Strait tensions and geopolitical bloc fragmentation.

US tariff pressure, Section 301

Washington’s Section 301 probes and shifting tariff tools are raising uncertainty for Korean exporters and inbound investors. Seoul’s $350bn U.S. investment framework and “excess capacity” scrutiny could trigger targeted duties, compliance costs, and supply-chain re-routing decisions.

Shipbuilding cooperation and rearmament demand

Shipbuilding is central to the U.S. investment package, with $150bn earmarked for cooperation and low-risk financing support. Rising naval and commercial demand, plus U.S. capacity constraints, create opportunities for Korean yards, equipment exporters, and U.S.-based partnerships.

Tax reform and investment uncertainty

With the May budget approaching, Treasury is weighing changes to CGT discounts, negative gearing, trusts and business investment incentives. Shifting tax settings can reprice real estate, private capital, and M&A, while policy uncertainty may delay large commitments and financing decisions.

Tech M&A and capital recycling

Large exits and defense-linked demand keep Israel’s tech ecosystem investable but sensitive to security and governance headlines. The Wiz deal (about $32bn) implies significant liquidity for founders and employees, while war uncertainty and talent outflows can reshape valuations and hiring plans.

US tariff reset, FTA acceleration

US tariffs shifting to a 15% uniform rate for 150 days narrows Thailand’s disadvantage (previously ~19% on some goods), encouraging shipment front-loading. Thailand is accelerating FTAs (EU, Korea, ASEAN-Canada), reshaping market access and sourcing strategies.

Strategic corridor and rail megaprojects

Turkey secured preliminary $6.75bn financing for a Bosporus rail crossing linking ports and airports, targeting 30m tons freight annually. Alongside Middle Corridor and Development Road ambitions, this can shorten transit times, but execution, permitting, and cost-overrun risks remain.