Mission Grey Daily Brief - January 15, 2025
Summary of the Global Situation for Businesses and Investors
The global situation remains tense as geopolitical and economic tensions continue to escalate. The Russia-Ukraine war is now in its third year, with US officials warning of a possible Russian attack on the US and new sanctions being imposed on Russian oil producers and vessels to squeeze Russia's ability to finance the war. North Korea has fired multiple short-range ballistic missiles, condemned by South Korea and Japan, just days before the inauguration of US President-elect Donald Trump. Trump's pursuit of Greenland, a vast Arctic island with massive resource potential, has kicked into overdrive, with Trump refusing to rule out the use of military or economic force to make Greenland a part of the US. The US has removed Cuba from the terrorism blacklist, a significant development in US-Cuba relations.
Russia-Ukraine War
The Russia-Ukraine war continues to be a major concern for businesses and investors, as it enters its third year. US officials have warned of a possible Russian attack on the US, with cargo shipments catching fire at German, British, and Polish airports and warehouses, believed to be the work of Russian sabotage. The White House has expressed concern that the Russians are planning to bring their sabotage to the US, with aides to President Joe Biden sending a warning to Russian President Vladimir Putin. The warning stipulated that if Russia’s sabotage led to a mass casualty event in the air or on the ground, the US would hold Russia accountable for “enabling terrorism”.
New sanctions have been imposed on Russian oil producers and vessels, targeting Gazprom Neft and Surgutneftegas, Russia’s second- and fourth-largest oil producers, as well as 183 vessels transporting Russian oil and oil products to foreign markets. The sanctions aim to further squeeze Russia’s ability to finance its invasion of Ukraine, with oil being Russia’s most important source of revenue, accounting for more than a third of the federal budget. Britain has joined the United States in sanctioning the two oil companies, which combined produce more than 1 million barrels a day.
The sanctions are expected to drain billions of dollars per month from the Kremlin's war chest, intensifying the costs and risks for Moscow to continue its war in Ukraine. Ukrainian President Volodymyr Zelenskiy has thanked the United States and Britain for the new measures, expecting them to cut income for the Kremlin and restore peace.
North Korea Missile Launches
North Korea has fired multiple short-range ballistic missiles, condemned by South Korea and Japan, just days before the inauguration of US President-elect Donald Trump. The missiles travelled about 250 km (155 miles) after lifting off at around 09:30 am (0030 GMT) from Kanggye, Jagang Province, near the country's border with China. South Korea's Acting President Choi Sang-mok has condemned the launch as a violation of United Nations Security Council resolutions and pledged an airtight posture. Japan's Chief Cabinet Secretary Yoshimasa Hayashi has also condemned the launch and pledged to take all possible measures to respond through close cooperation with Washington and Seoul, including real-time sharing of missile warning data.
The launch occurred during a visit to Seoul by Japanese Foreign Minister Takeshi Iwaya, with South Korean Foreign Minister Cho Tae-yul and Iwaya condemning North Korea's nuclear and missile development and pledging to boost security ties. U.S. Secretary of State Antony Blinken has called for further strengthening of bilateral and trilateral cooperation involving Tokyo to better counter North Korea's growing military threats.
The launch is seen as a show of force by North Korea, days before the inauguration of Trump, who held unprecedented summits with North Korean leader Kim Jong Un during his first term and has touted their personal rapport. South Korean lawmakers have said that Pyongyang's recent weapons tests were partly aimed at "showing off its U.S. deterrent assets and drawing Trump's attention", after vowing "the toughest anti-U.S. counteraction" at a key year-end policy meeting last month.
Trump's Pursuit of Greenland
US President-elect Donald Trump's pursuit of Greenland, a vast Arctic island with massive resource potential, has kicked into overdrive, with Trump refusing to rule out the use of military or economic force to make Greenland a part of the US. Trump has described US ownership of the autonomous Danish territory as an "absolute necessity" for purposes related to "national security and freedom throughout the world", and has doubled down on those comments, refusing to rule out the use of military or economic force to make Greenland a part of the US.
Greenland's Prime Minister Mute Egede has told Trump that the Arctic island is "not for sale" and urged the international community to respect the territory's aspirations for independence. Alongside Danish Prime Minister Mette Frederiksen, Egede has called for talks with Trump to resolve the situation. Trump's incoming national security advisor, Rep. Michael Waltz, has said that the pursuit of Greenland is about critical minerals and natural resources, reintroducing America in the Western Hemisphere, and the 'America First' agenda.
Greenland is going to become more and more topical, with critical minerals and rare earth elements being vital components in emerging green technologies, such as wind turbines and electric vehicles, energy storage technologies, and national security applications. China is the undisputed leader of the critical minerals supply chain, accounting for roughly 60% of the world's production of rare earth minerals and materials. US officials have previously warned that this poses a strategic challenge amid the pivot to low-carbon energy sources.
US-Cuba Relations
The US has removed Cuba from the terrorism blacklist, a significant development in US-Cuba relations. The removal of Cuba from the terrorism blacklist is a positive step towards improving relations between the two countries, which have been strained for decades. The move could potentially lead to increased trade and investment opportunities for US businesses in Cuba, as well as improved diplomatic relations.
However, it is important to note that the removal of Cuba from the terrorism blacklist does not mean that all sanctions against Cuba have been lifted. The US still maintains a comprehensive embargo on Cuba, which restricts trade and investment opportunities for US businesses. Additionally, the US government has stated that it will continue to support the Cuban people in their pursuit of democracy and human rights.
Businesses and investors should closely monitor the developments in US-Cuba relations, as the removal of Cuba from the terrorism blacklist could potentially open up new opportunities for trade and investment in Cuba. However, it is important to remain cautious and aware of the ongoing political and economic challenges in Cuba, as well as the potential risks associated with investing in the country.
Further Reading:
Biden says he’s leaving Trump ‘strong hand to play,' defends his record on Afghanistan - Fox News
Brit Hume: The withdrawal from Afghanistan encouraged dictators in Beijing and Moscow - Fox News
Lebanon Names ICJ Chief As Prime Minister In Latest Blow To Iran - Radio Free Europe / Radio Liberty
Trump is fixated on Greenland — a vast Arctic island with massive resource potential - CNBC
U.S. removes Cuba from terrorism blacklist - The Weekly Journal
US officials reached out to Putin over fears of possible attack, report says - The Independent
Themes around the World:
Fiscal Deficit and Sovereign Debt Concerns
France's public debt exceeds 100% of GDP, with projections rising to 121% by 2028, triggering multiple credit rating downgrades. The large fiscal deficit and high borrowing costs strain public finances, raising risks of a credit crisis similar to Greece's past experience. This fiscal fragility pressures government spending and social programs, complicating economic stability and investor trust.
Ukraine's Growing Technological Military Capabilities
Ukraine's advancement as a drone superpower and its strategic use of technology have increased its operational reach and military effectiveness against Russia. This technological edge influences international defense cooperation, arms supply decisions, and geopolitical calculations, potentially altering conflict dynamics and regional security frameworks relevant to investors and defense industries.
Weak German Economic Sentiment and Inflation
German economic sentiment showed slight improvement in late 2025 but remains fragile amid accelerating inflation, especially in services. Export challenges persist due to geopolitical tensions and unfavorable exchange rates, with significant declines in shipments to the US. Rising costs and subdued demand constrain recovery prospects, underscoring ongoing vulnerabilities in Germany's export-driven economy.
Political and Institutional Stability Risks
Judicial actions against former President Bolsonaro and ongoing political tensions create uncertainty. While the incumbent government gains support, concerns about institutional stability and policy continuity remain, influencing investor confidence and market volatility ahead of the 2026 elections.
Strong Baht Challenges Export Competitiveness
The Thai baht's appreciation against the US dollar has weakened export and tourism competitiveness, key pillars of the economy. Business groups urge the Bank of Thailand to manage currency strength to maintain favorable exchange rates, highlighting concerns over gold trading and money laundering influencing currency dynamics.
US Political Instability and Global Finance Risks
US political dysfunction, exemplified by government shutdowns and debt-ceiling standoffs, poses systemic risks to the global financial system. The dollar's central role creates a single point of failure, with political gridlock threatening liquidity, market stability, and international confidence in US financial governance.
Foreign Investment Decline and Uncertainty
Foreign direct investment in Thailand plunged by over 50% in 2020 due to the pandemic, with uncertain recovery prospects. Key investors include Japan, China, and the US. The decline affects sectors like electronics and agriculture, while medical sector investments surged, reflecting shifting priorities amid health crises.
Investor Sentiment and Market Volatility
Despite political and fiscal uncertainties, French equity markets show resilience, with the CAC 40 reaching record highs driven by strong corporate earnings. However, political gridlock and budgetary impasses maintain pressure on French government bonds, causing elevated yields and risk premiums. Investor caution persists, particularly regarding mid-cap stocks and financial institutions, reflecting concerns over prolonged instability and fiscal sustainability.
Cybersecurity Risks and Economic Impact
The Jaguar Land Rover cyberattack, with an estimated £1.9 billion economic cost, highlights the growing threat of cyber incidents to UK businesses. Cybersecurity vulnerabilities pose significant risks to supply chains, operational continuity, and investor confidence, necessitating increased investment in digital defenses and risk management frameworks.
Political Risks Affecting Sovereign Debt and Eurozone Stability
France’s political deadlock and fiscal challenges increase sovereign risk premiums, widening spreads between French and German bonds. This dynamic undermines confidence in the Eurozone’s fiscal cohesion, potentially weakening the euro’s attractiveness globally. Prolonged instability in France, the Eurozone’s second-largest economy, poses systemic risks, complicating monetary policy and economic governance within the union.
Informal Economy and Tax Evasion Challenges
Pakistan's informal economy, estimated at $68 billion, undermines formal sector competitiveness and shrinks the tax base. High tax rates and inconsistent enforcement incentivize smuggling and evasion, complicating fiscal stability and deterring compliant businesses, necessitating reforms for equitable taxation and enforcement to restore investor confidence.
Strategic Gulf Investment in Real Estate
Gulf investors are increasingly targeting Egypt's real estate sector, attracted by its scale, growth potential, and strategic location. Large-scale urban development projects and government incentives, including dollar-denominated land purchases, offer stable, long-term returns. This trend underscores Egypt’s role as a gateway for Gulf capital seeking diversification and exposure to a dynamic Middle Eastern market.
Challenges in Gigaproject Delivery and Fiscal Discipline
Saudi Arabia faces challenges in delivering ambitious megaprojects like NEOM and Trojena, with delays and design revisions amid budget deficits. The government is recalibrating spending priorities, emphasizing fiscal discipline and private sector participation. These adjustments impact investor confidence and timelines for infrastructure critical to economic transformation and global event hosting.
Growth of Digital Lending Sector
Indonesia's peer-to-peer lending sector continues robust expansion, reaching Rp87.6 trillion in August 2025 with a stable risk profile. Regulatory oversight ensures compliance with equity requirements, supporting financial inclusion and alternative financing avenues, which are critical for MSMEs and digital economy growth amid evolving financial landscapes.
Gulf Investment in Real Estate
Gulf investors increasingly view Egypt’s real estate market as a strategic gateway for growth, attracted by large-scale urban development projects and government incentives. This influx of capital supports infrastructure expansion and urbanization, creating opportunities in construction, hospitality, and retail sectors, which are vital for economic diversification and regional integration.
Corporate Cash Hoarding Amid Uncertainty
South African firms hold record cash reserves (~$96 billion), reflecting defensive liquidity preferences amid policy uncertainty and weak business confidence. This liquidity hoarding limits capital investment and economic dynamism, though selective borrowing in key sectors continues, signaling cautious optimism for future growth.
IMF Pressure to Devalue Ukrainian Hryvnia
The IMF urges Ukraine to devalue its currency to increase local currency revenues and alleviate budgetary pressures amid war financing needs. However, concerns about inflation and social unrest persist. This financial strategy impacts Ukraine's macroeconomic stability, investor perceptions, and the broader economic environment for business operations.
Raw Material Export and Downstreaming Policy
Indonesia's government emphasizes mineral downstreaming to capture added value domestically, moving away from raw material exports that primarily benefit foreign countries. While this policy aims to boost regional economic equality and industrialization, it faces criticism over environmental impacts and community rights, highlighting the balance between economic development and sustainability.
Impact on Global Oil Markets
Sanctions on Russian oil majors have triggered sharp rises in global oil prices, with Brent crude surging over 5%. Supply concerns and the potential disruption of Russian crude flows have reintroduced a geopolitical risk premium. This volatility affects energy-importing countries, raises inflationary pressures, and influences central bank policies worldwide, while prompting a scramble for alternative oil sources.
Tax Hikes to Fund Defense Spending
Facing budget deficits driven by war costs and sanctions, the Kremlin plans tax increases on wealthy individuals, corporations, and VAT hikes to 22%. While aimed at sustaining defense and social programs, these measures risk dampening consumer demand and corporate investment, potentially deepening economic stagnation and inequality.
Taiwan's Energy Security Risks
Taiwan's heavy reliance on imported energy, especially LNG (97% by sea), exposes it to significant risks amid Chinese military threats and potential blockades. This vulnerability could disrupt critical industries like semiconductors, prompting Taiwan and the US to bolster energy storage, reconsider energy mixes, and support secure LNG shipments, impacting industrial stability and investment confidence.
Energy Market Transformation and Reorientation
Geopolitical tensions and sanctions have halved Russian gas supplies to Europe, prompting Russia to pivot its energy exports towards Asia. Despite challenges, Russia plans to maintain oil production levels within OPEC+ agreements, signaling a strategic shift in global energy markets with implications for supply security and investment flows.
Economic Growth Slowdown and Business Sentiment
France's economic growth is slowing sharply, with 2025 growth forecast at 0.9%, below expectations. Consumption and investment are contracting amid political uncertainty, dampening business confidence and order books. Manufacturing and services sectors show broad weakness, with subdued demand and cautious corporate outlooks, threatening employment and overall economic resilience in the near term.
Credit Rating Upgrade and Economic Stability
Egypt’s credit rating upgrade by S&P to 'B' and Fitch's affirmation reflect significant progress in economic reforms, macroeconomic stability, and fiscal discipline. This improvement boosts investor confidence, reduces financing costs, and enhances Egypt’s attractiveness for foreign investment, positively impacting trade, capital inflows, and overall economic growth prospects.
Surging Government Bond Yields and Credit Risk
The political turmoil has driven French 10-year government bond yields above 3.6%, with spreads over German bunds reaching historic highs. This signals heightened country risk perception, raising borrowing costs for the government and financial institutions, and increasing market volatility.
Geopolitical Tensions and Global Trade Risks
Rising US-China trade tensions and rare earth export restrictions create a risk-off environment impacting UK markets. The UK’s strategic positioning between the EU and global powers requires careful navigation of geopolitical risks. These tensions may disrupt supply chains, increase costs, and introduce volatility in trade and investment flows affecting UK businesses.
US-China Trade Tensions Escalate
Renewed trade conflicts between the US and China, including threats of 100% tariffs on Chinese goods and China's export controls on rare earth minerals, are disrupting global supply chains and increasing market volatility. These tensions impact key sectors like technology, manufacturing, and defense, forcing companies to reassess investment and sourcing strategies amid heightened geopolitical risk.
Mergers and Acquisitions Rebound
Canadian M&A activity is accelerating, fueled by easing inflation, lower interest rates, and strong foreign investment attracted by a weak loonie and solid fundamentals. Cross-border deals span diverse sectors including oil, gas, mining, telecom, and retail, reflecting renewed corporate confidence and capital availability.
Economic Growth Amid Trade Pressures
Vietnam targets a robust 10% annual economic growth over the next five years despite challenges from US tariffs and global trade uncertainties. The government prioritizes macroeconomic stability, inflation control, and public debt limits. However, reliance on exports, consumption, and investment momentum remains fragile, with strategic competition and trade protectionism posing ongoing risks to growth and investment flows.
Political Risk and Investment Protection
Increasing global political instability, nationalism, and conflicts necessitate political risk insurance (PRI) for multinational firms. PRI mitigates losses from expropriation, political violence, and regulatory changes, becoming essential for managing uncertainties in cross-border investments and safeguarding profits.
Financial Sector Earnings Amid Uncertainty
Major US financial institutions' earnings reports provide critical insights into economic health amid trade tensions and political disruptions. Credit quality, investment banking activity, and consumer spending trends revealed in these reports influence market sentiment and guide investment strategies in a volatile environment.
Monetary Policy and Economic Outlook
The US Federal Reserve is cautiously easing monetary policy amid moderating economic growth and inflation. Interest rate adjustments will influence borrowing costs, investment decisions, and consumer spending. The economic slowdown forecast for 2025-2026 necessitates adaptive investment strategies, with inflation and tariffs as key variables shaping market stability.
Growth of Digital Lending Sector
Indonesia's peer-to-peer lending market reached Rp87.6 trillion in August 2025, growing 21.6% year-on-year, reflecting robust expansion in digital finance. Regulatory oversight by OJK ensures risk control, but challenges remain with some platforms not meeting equity requirements, impacting credit availability and financial inclusion strategies.
EU's Strategy to Unlock Frozen Russian Assets for Ukraine
The European Commission's complex plan to mobilize approximately EUR 140 billion in frozen Russian assets aims to finance Ukraine's war efforts and reconstruction. By issuing zero-interest reparations loans conditional on reforms, the EU seeks to mitigate political and legal risks while sustaining Ukraine's financing needs amid constrained Western support, impacting international financial governance and geopolitical risk assessments.
Reimposed UN Sanctions and Global Enforcement
The snapback of UN sanctions has reinstated restrictions on Iran’s banking and oil sectors, with Western nations enforcing these measures despite opposition from China and Russia. This fragmented enforcement complicates Iran’s international trade, increasing risks of asset seizures and shipping confrontations. The sanctions significantly constrain Iran’s access to global financial systems and export markets, impacting multinational operations and supply chain reliability.
Stock Market Volatility and Corporate Earnings
Saudi Arabia's Tadawul stock index shows mixed performance influenced by corporate earnings reports and oil price fluctuations. Key sectors like banking and utilities experience gains, while others face declines. Market direction remains sensitive to oil price trends and earnings outcomes, impacting investor confidence and capital flows.