Mission Grey Daily Brief - February 05, 2025
Summary of the Global Situation for Businesses and Investors
The world is bracing for a new trade war as President Donald Trump imposes tariffs on Canada, Mexico, China, and the European Union. Global markets are reacting negatively to the tariffs, with stocks falling and the dollar strengthening. Colombia has declared a state of emergency after President Gustavo Petro turned back two flights carrying deported migrants from the U.S. in protest against their treatment by U.S. authorities. President Petro has granted himself extraordinary powers for at least 90 days, including the ability to impose taxes without congressional approval and enact executive orders with the force of law. The situation was resolved through official channels, with each side framing the resolution in its favor. Ukraine's mineral riches have long been eyed by its allies, and Trump has suggested that Ukraine should pay for US support with rare minerals. Denmark's Prime Minister Mette Frederiksen has called for a robust response from her European Union partners if Trump presses ahead with his threat to take control of Greenland.
Tariffs and Trade War
President Donald Trump has imposed tariffs on Canada, Mexico, China, and the European Union, sparking fears of a new trade war. Global markets are reacting negatively to the tariffs, with stocks falling and the dollar strengthening. The tariffs are expected to lead to major disruption in some of the world's biggest economies. Canada, Mexico, and China have vowed to respond in kind, with China announcing a broad package of economic measures targeting the United States and the European Union warning of further dialogue or deal-making. The tariffs are expected to lead to major disruption in some of the world's biggest economies. Canada, Mexico, and China have vowed to respond in kind, with China announcing a broad package of economic measures targeting the United States and the European Union warning of further dialogue or deal-making. The leaders of Canada and Mexico have agreed to bolster border enforcement in calls with Trump, who has now suspended his proposed tariffs for a month. The move has seen global stocks rebound following earlier retreats. Trump has talked about how China is allowing fentanyl to flood into the US and not doing enough to stop the supply. Trump will speak to his Chinese counterpart, President Xi, in the next day or so and it may well be that there is another deal to be done there. Three Federal Reserve officials have warned that the Trump administration’s plans for trade tariffs come with inflation risks for the US. The full suite of tariffs on China, Mexico and Canada will cost the typical American household an additional $1,200 a year.
Colombia's State of Emergency
Colombia has declared a state of emergency after President Gustavo Petro turned back two flights carrying deported migrants from the U.S. in protest against their treatment by U.S. authorities. President Petro has granted himself extraordinary powers for at least 90 days, including the ability to impose taxes without congressional approval and enact executive orders with the force of law. The situation was resolved through official channels, with each side framing the resolution in its favor. The Colombian government announced that “the impasse was overcome” and took the additional step of offering the presidential plane to repatriate the deported nationals. Meanwhile, the Trump administration declared victory, releasing a statement asserting that Colombia had fully acquiesced to its demands. The situation was resolved through official channels, with each side framing the resolution in its favor. The Colombian government announced that “the impasse was overcome” and took the additional step of offering the presidential plane to repatriate the deported nationals. Meanwhile, the Trump administration declared victory, releasing a statement asserting that Colombia had fully acquiesced to its demands. The situation was resolved through official channels, with each side framing the resolution in its favor. The Colombian government announced that “the impasse was overcome” and took the additional step of offering the presidential plane to repatriate the deported nationals. Meanwhile, the Trump administration declared victory, releasing a statement asserting that Colombia had fully acquiesced to its demands.
Ukraine's Mineral Riches
Ukraine's mineral riches have long been eyed by its allies, and Trump has suggested that Ukraine should pay for US support with rare minerals. Denmark's Prime Minister Mette Frederiksen has called for a robust response from her European Union partners if Trump presses ahead with his threat to take control of Greenland. The US and other Western countries have eyed Ukraine’s mineral riches for a long time. Trump has said he wants access to Ukraine’s mineral deposits in exchange for future military aid that Kyiv needs as it continues to defend itself against Russia’s aggression. Trump has previously suggested that any future assistance should be provided as a loan and would be conditioned on Ukraine negotiating with Russia. A memorandum of understanding prepared under the Biden administration last year said the US would promote investment opportunities in Ukraine’s mining projects to American companies in exchange for Kyiv creating economic incentives and implementing good business and environmental practices. Ukraine already has a similar agreement with the European Union, signed in 2021. The US largely depends on imports for the minerals it needs, many of which come from China. Of the 50 minerals classed as critical, the US was entirely dependent on imports of 12 and more than 50% dependent on imports of a further 16. Ukraine, meanwhile, has deposits of<co: 13>Ukraine, meanwhile, has deposits of
Further Reading:
A Rekindled Conflict Has Pushed Colombia Into a State of Emergency - New Lines Magazine
China hits back as Trump’s tariffs go into effect - CNN
February 4: The front page of Times of Malta 10, 25 and 50 years ago - Times of Malta
Global markets brace for chaos ahead of Trump's tariffs on Canada and China - NBC News
Markets slide as Trump's tariff war escalates - BBC.com
Trump pauses Mexico, Canada tariffs; Musk’s Treasury, USAID role questioned - Al Jazeera English
U.S. stocks, global markets fall on fears of a new trade war - NPR
US tariffs on imports set to rise drastically on Tuesday - Vatican News - English
Uh oh, Canada: Trump declares trade war on America's "best friend" - Axios
Themes around the World:
Stock Market Growth and Investor Expansion
Indonesia's stock market shows robust growth with the Jakarta Composite Index rising and investor numbers reaching 18.6 million. The market capitalization nears US$900 billion, making it Southeast Asia's largest. Expansion of investment products and increased trading activities indicate a maturing capital market, attracting both domestic and foreign investors.
Middle East Peace Initiatives and US Influence
A US-led peace plan involving Trump and Netanyahu aims to resolve the Gaza conflict, with broad regional support including Gulf Cooperation Council states. This development could stabilize the Middle East, expand the Abraham Accords, and reinforce US geopolitical influence. However, ongoing tensions with Russia and China’s strategic posturing in the Indo-Pacific add complexity to global security dynamics affecting trade and investment.
UK Stock Market Volatility and Investment Outlook
UK equities exhibit mixed signals with some sectors hitting record highs while others face profit warnings amid weak consumer demand and macroeconomic uncertainty. Valuations remain attractive relative to US markets, but investors must navigate risks from inflation, fiscal policy, and geopolitical factors affecting market stability and capital allocation.
Foreign Capital Inflows via Bond Market
Canada's bond market has seen record issuance of 'Maple bonds' by global firms like Citigroup and McDonald's, attracted by lower borrowing costs and investor appetite for non-US assets. This trend reflects a strategic shift amid US trade policy uncertainties, enhancing Canada's role as a financing hub and diversifying capital sources.
Foreign Ownership Liberalization in Equities
The anticipated removal of the 49% foreign ownership cap on Saudi equities is a potential game-changer, expected to attract significant foreign investment inflows, enhance market liquidity, and improve corporate governance. However, legislative changes are required to sustain momentum, which could transform Saudi capital markets and investment strategies.
Energy Dependence and Geopolitical Balancing
Turkey remains heavily reliant on Russian oil and gas, accounting for nearly half of its energy imports, while simultaneously pursuing diversification through US LNG deals and renewable energy expansion. This delicate balance amid US pressure and regional tensions impacts energy security, costs, and geopolitical risk for businesses operating in Turkey.
Bank of Japan Monetary Policy Shift
The Bank of Japan is poised to raise interest rates in October 2025, signaling an end to ultra-loose monetary policy after achieving inflation targets. This shift affects corporate profits, exchange rates, and global bond markets. While financial sectors may benefit, exporters face risks from a stronger yen, necessitating strategic adjustments in investment and trade operations.
Eurozone Financial Stability Risks
As the Eurozone's second-largest economy, France's fiscal and political instability poses systemic risks to the euro area's financial stability. Rising French bond yields and market jitters could spill over to other member states, pressuring the European Central Bank to intervene, which may challenge its credibility and monetary policy independence.
US Tariffs Impact on Indian Exports
The imposition of steep US tariffs, including a 50% duty on Indian goods and proposed tariffs on pharmaceuticals and services, poses significant risks to Indian exporters. Key sectors like gems, textiles, seafood, and auto parts face earnings pressure, leading to market-cap losses and export contraction risks. This threatens bilateral trade relations and investor confidence, impacting foreign investment and supply chains.
Crypto Market Sensitivity to Geopolitics
Cryptocurrency markets have exhibited heightened volatility in response to US elections, trade wars, and Middle East conflicts. While some digital assets have acted as speculative safe havens, ongoing geopolitical tensions and regulatory shifts challenge crypto's role in global finance, influencing investor behavior and market dynamics.
Brexit Uncertainty and Trade Impact
Ongoing Brexit negotiations and the looming possibility of a no-deal Brexit continue to create significant uncertainty for UK markets. This affects investor confidence, disrupts trade flows, and pressures sectors like energy and technology. The UK government’s preparations for no-deal scenarios and stalled EU trade talks highlight risks to supply chains and cross-border commerce.
Currency Volatility and Yen Depreciation
The yen has plunged to multi-month lows amid expectations of prolonged monetary easing and fiscal stimulus under Takaichi's administration. Finance Ministry warnings highlight risks of disorderly currency moves, which could impact import costs and inflation. While a weaker yen benefits exporters, it raises input costs, posing challenges for businesses and policymakers balancing growth and price stability.
Supply Chain Modernization and Integration
Vietnam seeks to enhance supply chain resilience and global integration through infrastructure upgrades, digital technologies (blockchain, AI, IoT), and stronger linkages between domestic firms and FDI enterprises. Overcoming low localization and closed-loop FDI supply chains is critical for deeper participation in global value chains and sustainable trade growth.
Currency Depreciation and Inflation Crisis
Turkey faces severe currency depreciation with the Turkish lira losing over 21% in a year and inflation hovering above 33%, undermining purchasing power and investor confidence. Persistent inflation and currency weakness complicate pricing, cost management, and financial planning for businesses, increasing operational risks and deterring foreign investment.
Foreign Institutional Investor (FII) Outflows
Sustained foreign portfolio investor selling has pressured Indian equities, driven by geopolitical tensions, tariff concerns, and global risk-off sentiment. FIIs have sold billions in Indian stocks since 2024, contributing to market volatility and rupee depreciation. While domestic institutional investors provide some support, continued FII outflows could dampen liquidity, valuations, and capital availability for Indian companies.
Economic Slowdown and Stagnation Risks
Russia's economy shows signs of near stagnation with GDP growth around 0.4% in mid-2025, far below the 2% needed to sustain defense and social spending. Declines in civilian industries such as clothing, furniture, and metals highlight structural weaknesses, raising concerns about prolonged economic stagnation amid war-driven fiscal pressures.
Tech Sector Challenges and Isolation Risks
Prime Minister Netanyahu's 'super-Sparta' vision signals a shift towards economic self-reliance amid anticipated trade sanctions and boycotts. This rhetoric unsettles Israel's globally integrated tech industry, which depends on international connectivity, potentially dampening foreign investment, innovation collaboration, and export growth amid rising geopolitical isolation.
U.S. Tariffs and Trade Policy Impact
U.S. tariff policies, including recent increases on pharmaceuticals and heavy trucks, create uncertainty for Japanese exporters. While some tariff reductions have eased pressures, ongoing trade frictions threaten export volumes and corporate profitability. Businesses must navigate these risks through supply chain diversification and strategic market positioning.
National Security Measures in Critical Industries
Taiwan is tightening security protocols to prevent Chinese infiltration in vital sectors such as medical logistics, aiming to safeguard health data and supply chains. Enhanced vetting and restrictions on Chinese investments in critical infrastructure reflect growing concerns over espionage and supply chain resilience.
Geopolitical Trade Tensions and Market Sentiment
Concurrent global trade tensions, notably between the US and China, add complexity to France's economic environment. Although recent conciliatory signals have eased some market pressures, these external factors compound domestic uncertainties, influencing investor risk appetite and supply chain strategies.
Geopolitical Risks and Credit Ratings
Ongoing conflict and geopolitical tensions have led to credit rating downgrades and increased borrowing costs for Israel. However, recent ceasefire developments and fiscal discipline may stabilize or improve credit outlooks. Investors must monitor these dynamics closely, as credit ratings influence sovereign debt attractiveness and corporate financing conditions.
Regional Market Interdependencies and Investor Caution
The Middle East's financial markets, including Israel's, have rallied on ceasefire optimism but remain vulnerable to geopolitical volatility. Investors exhibit caution due to uncertainties over the durability of peace agreements, domestic political dynamics, and broader regional security risks, influencing capital allocation and risk management strategies.
IMF Program and Economic Reforms
Pakistan's adherence to the IMF Extended Fund Facility and implementation of structural reforms have been pivotal in reducing default risk and improving fiscal discipline. These reforms include timely debt servicing, revenue enhancement, and governance improvements, which have stabilized macroeconomic indicators, controlled inflation, and enhanced Pakistan's credibility with global lenders and investors.
Commercial Real Estate Growth Prospects
Brazil's commercial real estate market is projected to grow at a CAGR of 2.72% from 2025 to 2033, driven by e-commerce expansion, demand for logistics warehouses, flexible office spaces, and green-certified buildings. Sustainability-linked financing and government incentives are fostering investment, while regional development and modern infrastructure support market resilience and diversification.
Inflation and Monetary Policy
Inflation in Egypt remains elevated but shows signs of easing, with headline inflation at 12% in August 2025. The Central Bank of Egypt has cut policy rates by 525 basis points in 2025 to support growth while managing inflation risks. Monetary policy remains data-driven, balancing disinflation and economic stimulus amid global and domestic uncertainties.
Corporate Cash Hoarding Amid Uncertainty
South African non-financial companies hold a record $96 billion in cash deposits, reflecting defensive financial strategies amid weak business confidence and policy uncertainty. This liquidity preference slows capital formation and investment, potentially dampening economic growth and job creation despite readiness to invest once conditions improve.
Technological Innovation and Industry Shifts
US technology firms are integrating AI into products and services, with significant investments in AI infrastructure and quantum computing. Corporate mergers and strategic partnerships, such as Intel’s talks with AMD, signal industry consolidation. Meanwhile, delays in aerospace manufacturing and shifts in consumer tech priorities highlight evolving sector challenges, influencing global supply chains and investment strategies.
Trade Finance Market Growth
The Saudi trade finance market is expanding steadily, projected to grow from USD 111 billion in 2019 to USD 135 billion by 2026. Diverse financial instruments support key sectors such as petroleum, machinery, food, and transport, facilitating international trade and supply chain operations critical to the Kingdom’s economic diversification.
Labor Market and Workforce Dynamics
The conflict-induced suspension of Palestinian work permits has led to increased recruitment of Indian laborers in construction and healthcare sectors, altering labor market composition. This shift affects local employment dynamics, wage structures, and social stability, with implications for operational continuity and human capital management in affected industries.
Monetary Policy and Inflation Dynamics
The Central Bank of Egypt (CBE) has progressively cut interest rates by 525 basis points in 2025 amid easing inflation, which fell to 12% in August. Despite inflation risks from regulated price hikes and geopolitical tensions, the CBE aims to sustain disinflation while maintaining positive real rates to support economic stability and investment.
US-China Trade Tensions Impact
Escalating US-China trade tensions, including proposed tariffs and China's rare earth export restrictions, are creating significant uncertainty for South Korea's export-driven economy. These tensions risk disrupting global supply chains, weakening the Korean won, and dampening investor sentiment, potentially leading to capital outflows and inflationary pressures that could hinder economic growth and corporate earnings.
Financial Sector Consolidation and Stability Measures
In response to systemic risks highlighted by rural banking scandals, China is consolidating numerous small rural financial institutions to strengthen regional financial stability. This move addresses vulnerabilities linked to local government exposures and the real estate slump, aiming to restore depositor confidence and reduce systemic fragility in the banking sector.
Iran’s Strategic Partnerships and Sanctions Evasion
Iran leverages alliances with Russia, China, and non-Western countries to circumvent sanctions, maintain trade flows, and access alternative financial systems. These partnerships mitigate some sanctions impacts but complicate global diplomatic relations and pose risks for companies engaging with Iran.
China-Australia Trade Tensions
Recent reports indicate China has paused iron ore shipments from Australia's BHP, raising concerns about trade relations. This move recalls past trade conflicts and could disrupt Australia's key export sector, impacting commodity prices, mining companies' revenues, and the broader Australian economy. The situation underscores risks in Australia's reliance on China as its largest trading partner.
Emerging Investment Themes in Chinese Equities
Despite geopolitical tensions, Chinese equities attract renewed investor interest driven by technological breakthroughs and market rebounds. The rise of key sectors such as semiconductors, AI infrastructure, hydrogen energy, rare earths, and infrastructure REITs highlights evolving investment themes, supported by policy initiatives and capital inflows from global funds.
IMF Program and Economic Reforms
Strict adherence to the IMF Extended Fund Facility program, combined with bold structural reforms and timely debt repayments, has been pivotal in Pakistan's economic turnaround. These measures have enhanced fiscal discipline, improved credit ratings from Moody’s, Fitch, and S&P, and contributed to sustained financial stability, crucial for attracting foreign investment and reducing sovereign risk.