Mission Grey Daily Brief - January 30, 2025

Summary of the Global Situation for Businesses and Investors

The world is witnessing a new era of Trump, with the second administration of President Donald Trump beginning in the United States on January 20, 2025. Trump's campaign slogan, "Make America Great Again (MAGA)," signifies a focus on revitalizing the domestic economy and maximizing American economic interests by ceasing to act as "the world's policeman" and reconstructing "American hegemony." This has led to a shift in global circumstances, with China and Russia viewed as critical issues and potential threats. Trump's unpredictable negotiation-focused approach has raised questions about international society's reaction and China's engagement with it.

Trump's Second Term and its Global Implications

The Trump administration has designated China as the greatest threat, citing Beijing's long-term and strategic pursuit of global hegemony by 2049. Xi Jinping's "100-year plan" aims for "The Great Rejuvenation of the Chinese Nation", surpassing other countries economically and militarily. China's Belt and Road Initiative is expanding in Asia, Africa, and South America, constructing an independent economic system for military superiority. China's domestic economy shows signs of slowing down, but its focus on innovation suggests continued near-term expansion.

Trump's negotiation-focused approach is highly unpredictable, making it difficult to forecast international society's reaction and China's engagement with it. Some countries may strengthen ties with the U.S. based on economic interests, while others may experience cooling relationships. Withdrawal from multilateralism and divergence from internationally agreed "rule-based governance" are anticipated, particularly on issues like Palestine and climate change.

Rising Tensions in the Middle East and Asia

The West's victory in the Israel-Iran conflict, centred on Gaza, has demonstrated the U.S. and its allies' ability to prevail while managing multiple conflicts, including the Russia-Ukraine War and the Israel-Hamas War. This capability to mobilise and deploy vast political, economic, military, and intelligence assets has prompted a major attitudinal shift among key Middle Eastern powers, such as Saudi Arabia and the U.A.E. New agreements for Western firms in Iraq indicate a potential shift in regional dynamics.

Trump's Aggressive Stance on Immigration and its Impact on Latin America

Trump's standoff with Colombia over migrant deportations has sent ripples through Latin America, with Colombia ultimately conceding to U.S. demands. This aggressive posture and willingness to weaponize immigration and tariffs threaten regional economic balance and erode trust in U.S.-Latin American relations. Left-leaning governments advocating for policies misaligned with Washington's priorities may face heightened scrutiny and pressure. Smaller economies reliant on U.S. trade and investment are at high risk, and some countries may be pushed to strengthen ties with U.S. competitors like China and Russia.

Red Sea Shipping Route Disruptions

An explosion on a Hong Kong-flagged container ship in the Red Sea has forced the crew to abandon the vessel, sparking a major fire. The Red Sea is a crucial route for energy shipments and cargo between Asia and Europe, with $1 trillion worth of trade passing through annually. Houthi attacks have halved the number of ships using the route, and shippers are avoiding it due to risks, despite Houthi pledges to limit assaults. This disruption has significant implications for global trade and supply chains.

Themes around the World:

Board of Peace Alters Governance Landscape

The US-led Board of Peace, endorsed by the UN Security Council, introduces a new international governance framework for Gaza, with Israel’s participation. This body’s evolving mandate and legitimacy debates create regulatory uncertainty, affecting investment, reconstruction, and long-term business planning in the region.

Post-Brexit UK-EU Trade Realignment

The UK government seeks closer economic ties with the EU without rejoining the customs union, balancing regulatory alignment and trade benefits. Ongoing negotiations and political volatility create uncertainty for businesses, particularly regarding customs, standards, and future market access.

Sectoral Polarization in Export Competitiveness

While semiconductors and automobiles drive export growth, sectors like steel and machinery are losing ground due to Chinese competition and EU carbon border measures. This polarization challenges Korea’s export diversification and exposes supply chains to regulatory and market risks.

Currency Volatility and Capital Outflows

The South Korean won has weakened to levels not seen since the global financial crisis, partly due to the looming $350 billion investment outflow. This volatility raises financial risks for international investors and complicates funding for large-scale projects and trade settlements.

Nuclear Program Uncertainty and Geopolitical Tension

Iran’s nuclear program remains a flashpoint, with recent US and Israeli strikes on nuclear sites and Iran’s threats to weaponize. The unresolved nuclear issue heightens geopolitical risk, complicating long-term investment and trade planning for international businesses.

Shifting Trade Alliances and CPTPP Expansion

Japan is at the center of evolving regional trade alliances, including South Korea’s renewed bid to join the CPTPP. Ongoing negotiations and historical disputes with neighbors influence market access, regulatory alignment, and the future of Asia-Pacific economic integration.

Critical Minerals Strategy Reshapes Trade

Australia’s $1.2 billion critical minerals reserve, focused on antimony, gallium, and rare earths, aims to reduce reliance on China and stabilize supply chains. This initiative underpins new trade agreements, attracts investment, and enhances Australia’s role in global technology and defense supply networks.

Gulf Rivalry and Regional Instability

Intensifying competition with the UAE over influence in Yemen, Sudan, and Africa is fueling regional instability and media confrontations. This rivalry complicates diplomatic relations and could impact trade, investment flows, and supply chain security across the broader Gulf region.

Digital Finance and Stablecoin Experimentation

Pakistan’s partnership with World Liberty Financial, linked to the Trump family, on a dollar-pegged stablecoin signals a bold shift toward digital finance. The initiative aims to streamline remittances and attract blockchain investment, but raises regulatory, ethical, and geopolitical concerns.

Renewable Energy Expansion and Investment

Turkey achieved record wind energy growth in 2025, surpassing 14,700 MW installed capacity, and is preparing for its first offshore wind tenders. Predictable policy and financing conditions attract both domestic and foreign investors, positioning Turkey as a regional clean energy hub.

Regulatory Reforms and Business Environment

Ongoing economic reforms target improved investment climate, streamlined licensing, and expanded digital and physical infrastructure. The government is enhancing free zones, logistics corridors, and industrial clusters, notably in the Suez Canal Economic Zone, to boost exports and attract diversified FDI, especially in manufacturing and green energy.

Trade Diversification Imperative

Canada is aggressively pursuing trade agreements with partners like the UAE, China, and Qatar, aiming to double non-US exports by 2035. This strategy is driven by the need to mitigate risks from US protectionism and to attract foreign investment in sectors such as energy, AI, and infrastructure.

Manufacturing and Supply Chain Diversification

India’s push for manufacturing, supported by PLI schemes and Make in India, is attracting global supply chains seeking alternatives to China. Electronics exports reached Rs 4 lakh crore in 2025, with mobile phones and semiconductors driving export and employment growth.

Financial Sector Volatility and Shadow Banking

The UK financial sector faces ongoing challenges from declining business volumes and profitability, alongside systemic risks from the booming, largely unregulated $16tn shadow banking sector. Regulatory vigilance and stress testing are crucial to safeguard stability and investor confidence.

Infrastructure Modernization and Administrative Complexity

Major infrastructure and energy projects are hampered by complex regulations, slow administrative processes, and financing uncertainties. This delays project delivery, affecting logistics, energy supply, and investment timelines for multinational businesses.

Industrial Policy and Market Intervention

The US is intensifying industrial policy through subsidies and intervention, particularly in energy and manufacturing. While supporting domestic sectors, these measures increase market volatility and complicate international investment decisions.

Energy Stability and Eskom Turnaround

South Africa’s power grid has achieved its most stable period in five years, following Eskom’s recovery plan and a R254 billion bailout. Load shedding has virtually ended, boosting investor confidence and reducing operational risks for businesses.

US Sanctions Policy Intensifies

The US continues to expand sanctions, targeting Iranian officials, entities, and financial networks linked to oil sales and human rights abuses. These measures increase compliance risks for global firms, especially those with exposure to sanctioned jurisdictions and complex cross-border transactions.

Offshore Wind and Infrastructure Investment Boom

Major offshore wind projects and infrastructure upgrades are underway, with Victoria’s 2 GW auction and Western Australia’s 4 GW feasibility licenses leading the way. These initiatives promise to diversify energy supply, create thousands of jobs, and attract billions in investment, but face regulatory and community hurdles.

Energy Independence and Import Reduction

Indonesia is aggressively pursuing energy independence by halting imports of solar, gasoline, and jet fuel by 2027. Supported by refinery upgrades and biofuel mandates, these policies are expected to boost domestic industry, reduce trade deficits, and enhance energy security.

Green Energy Transition Accelerates

South Korea is rapidly advancing its green energy agenda, including large-scale investments in green ammonia and retrofitting coal plants for ammonia co-firing. These initiatives are reshaping the energy sector, creating new opportunities and compliance requirements for international investors.

Escalating US-China Trade Tensions

Trade tensions between China and the US remain elevated, with renewed tariffs and retaliatory measures. Despite a 19.5% drop in exports to the US in 2025, China posted a $1.2 trillion trade surplus, highlighting its resilience but also the ongoing risk of further escalation and global supply chain disruptions.

Port and Logistics System Weakness

Persistent inefficiencies in South Africa’s ports and railways, especially at Cape Town and Durban, continue to undermine export competitiveness and supply chain reliability. Despite some reforms, structural weaknesses in logistics remain a major constraint for international trade and business operations.

Strategic Investments in Recycling Infrastructure

The French government and EU are mobilizing over €1.5 billion to strengthen domestic battery recycling and reuse capacity. This investment wave is attracting international partners, reshaping the competitive landscape, and fostering joint ventures in battery circularity.

US-Korea Tariff and Investment Deal

South Korea’s $350 billion investment pledge in the US, in exchange for reduced tariffs, faces delays due to currency volatility and regulatory hurdles. The deal’s implementation and legal uncertainties around US tariffs significantly affect Korean capital flows and global supply chains.

Strategic Role in National Security Policy

The bomb shelter mandate is part of Poland’s broader civil defense modernization in response to regional threats. This positions the sector as strategically important, attracting interest from defense-oriented investors and suppliers, but also linking it to evolving geopolitical risk.

Sustainable Agribusiness and Compliance

The new EU-Mercosur deal and global trends are pushing Brazilian agribusiness toward higher sustainability, traceability, and quality standards. Only sectors and companies meeting these requirements will fully benefit, making ESG compliance a strategic imperative for international competitiveness.

Infrastructure and E-Mobility Expansion

Mexico is accelerating infrastructure investments in logistics, energy, and electric vehicle markets, supported by government incentives and foreign capital. Expansion of charging networks and data centers is transforming urban mobility and digital supply chains, but gaps remain in nationwide coverage.

Saudi Aramco’s Global Investment Drive

Aramco continues to secure international partnerships and invest in energy diversification, influencing global supply chains and capital flows. Its strategic moves, including stake acquisitions and cross-border ventures, impact energy markets and related industries worldwide.

Supply Chain Security Amid Geopolitical Tensions

Rising China-Japan tensions and US-China rivalry are driving South Korea to strengthen supply chain resilience. Export controls on dual-use goods and rare earths, particularly by China, pose risks to Korean high-tech manufacturing and regional supply chain stability.

Major Infrastructure and Digital Expansion

India’s infrastructure financing is integrating with global capital markets, focusing on green, resilient, and tech-enabled projects. Data center capacity doubled in 2025, with projections to triple by 2030, supporting digital transformation and robust supply chain logistics.

Technology Export Controls Tighten

The US continues to restrict advanced technology exports to China, especially AI chips, with new licensing and compliance requirements. Recent policy adjustments allow limited sales with strict conditions, balancing national security with economic interests and impacting global tech competition.

Market Consolidation and Developer Shakeout

Regulatory complexity and higher entry barriers from the Shelter Act are expected to drive consolidation in Poland’s construction sector. Smaller firms may exit or be acquired, favoring larger, capitalized players and international investors seeking stable partners for large-scale shelter projects.

Belt and Road Initiative Intensifies

China’s Belt and Road Initiative signed $213 billion in new deals in 2025, focusing on energy, metals, and infrastructure in Africa and Central Asia. This expansion strengthens China’s global economic reach and creates new opportunities and dependencies for partners.

Critical Minerals Supply Chain Security

France is intensifying international cooperation to diversify and secure critical minerals supply chains for EV batteries, reducing reliance on China. This strategic shift is crucial for trade, investment, and the resilience of EV battery second-life operations.

Intensified Korea-China Trade Negotiations

Ongoing negotiations to expand the Korea-China FTA to services and investment signal deepening economic ties. Progress in these talks could reshape market access, regulatory alignment, and investment flows, influencing regional supply chains and competitive positioning.