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Mission Grey Daily Brief - February 10, 2025

Summary of the Global Situation for Businesses and Investors

The global situation is marked by geopolitical tensions and economic uncertainty. President Donald Trump has implemented a series of policies that have significant implications for international relations and global trade. The war in Ukraine continues to escalate, with North Korea supporting Russia and a Russian oligarch warning of a potential world war. Trump's policies have also impacted allies such as Canada, Mexico, and Australia, as well as rivals like China. Trump's tariffs and trade policies have disrupted supply chains and increased costs for consumers and businesses. Trump's actions have also strained relations with allies and rivals, creating a volatile and unpredictable environment for businesses and investors.

Trump's Tariffs and Trade Policies

President Donald Trump has implemented a series of tariffs and trade policies that have significant implications for international relations and global trade. Trump's tariffs have disrupted supply chains and increased costs for consumers and businesses. Trump's tariffs on China have impacted the pharmaceutical industry, as China supplies the U.S. with approximately 30% of its active pharmaceutical ingredients. Trump's tariffs could lead to shortages or increased costs of generic drugs, putting patients at risk. Trump's tariffs have also impacted Ireland, which is highly exposed to U.S. trade policies due to historic links and an industrial policy that has relied on tax measures attractive to U.S. multinational corporations. Ireland collects much of the corporate tax revenue that a more coherent U.S. tax code would channel back across the Atlantic. Trump's tariffs have also impacted Canada, which is highly integrated with the U.S. auto industry and relies on Canada's heavier crude oils. Trump's tariffs have disrupted supply chains and increased costs for Canadian businesses and consumers. Trump's tariffs have also impacted Mexico, which is highly integrated with the U.S. auto industry and relies on Mexican labor for manufacturing. Trump's tariffs have disrupted supply chains and increased costs for Mexican businesses and consumers. Trump's tariffs have also impacted Australia, which is highly integrated with the U.S. steel and aluminum industry. Trump's tariffs have disrupted supply chains and increased costs for Australian businesses and consumers.

The War in Ukraine and North Korea's Involvement

The war in Ukraine continues to escalate, with North Korea supporting Russia and a Russian oligarch warning of a potential world war. North Korea has sent thousands of soldiers to fight alongside Russian troops, resulting in heavy losses for both sides. A Russian oligarch, Andrey Melnichenko, has warned that a world war could follow if <co:


Further Reading:

China makes some of Americans’ most common medicines. They won’t be spared from Trump’s tariffs - The Independent

Chinese construction risks turning the Yellow Sea into a flashpoint - Business Insider

Elite North Korean troops return to the fight after devastating battlefield losses - New York Post

Patrick Honohan: Ireland is more exposed to Trump’s tariff war than any other European country - The Irish Times

Putin Ally Warns Trump Escalation in Ukraine 'Will Lead to a World War' - Newsweek

They helped the US fight the Taliban. Now Trump has left these Afghans stranded - The Independent

Trump is intensifying his trade war. Australia may not be immune - Sydney Morning Herald

Trump will formally announce steel and aluminum duties Monday, including on Canada - Toronto Star

Ukraine-Russia war live: North Korean army supports ‘just cause’ of Putin’s war, Kim Jong Un says - The Independent

‘This is the next four years’: Canadian officials react to Donald Trump’s steel and aluminum tariff threats - Toronto Star

‘Turn this around’: Alarm grows in Australia after Trump announces 25 per cent tariffs - Sydney Morning Herald

‘We can’t count on the U.S. anymore’: Canada can pull away from America and thrive, economists say - Toronto Star

Themes around the World:

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Economic Growth and Investment Outlook

UK economic growth forecasts have been downgraded to around 1.2% for 2025 and 1% for 2026, with sluggish demand and subdued business investment due to higher labor costs and global uncertainties. Surveys indicate reduced capital spending intentions, highlighting cautious corporate sentiment that may constrain long-term growth and productivity improvements.

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Trade Diversification and China Relations

In response to US tariffs, South Africa is actively strengthening trade ties with China, including new agreements to export stone fruit varieties. This diversification aims to mitigate tariff impacts, access fast-growing consumer markets, and reduce dependency on traditional Western markets, reshaping South Africa’s international trade landscape.

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Saudi Arabia’s Strategic Engagement in Africa

Saudi Arabia is expanding its geopolitical and economic footprint in Africa, focusing on critical minerals, agriculture, talent mobility, and renewable energy investments. This strategic pivot supports economic diversification, secures resource supply chains, and fosters long-term partnerships, positioning the Kingdom as a key player in Africa’s development landscape.

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Construction Sector Growth Amid Recovery

Ukraine’s construction industry is projected to expand by 16.2% in 2025, driven by international aid, government recovery efforts, and infrastructure rebuilding. This growth presents opportunities for investors and contractors despite the challenging environment. Sustained financial assistance and modernization initiatives are critical to supporting Ukraine’s post-conflict economic stabilization and development.

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Currency Volatility and Pound Strength

The British pound’s sharp appreciation against the US dollar has pressured UK exporters by reducing competitiveness abroad, prompting firms to increase currency hedging. Monetary policy divergence between the Bank of England and the Federal Reserve adds complexity. Exchange rate volatility impacts earnings, investment decisions, and supply chain costs, necessitating sophisticated risk management strategies for UK businesses.

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Sanctions and Financial Evasion

Despite extensive Western sanctions targeting over 6000 Russian entities, Russia continues significant cross-border trade, facilitated by financial institutions that evade enforcement. The complexity of sanction enforcement, especially involving Chinese and UAE banks, undermines the effectiveness of economic pressure, complicating international compliance and risk assessments for investors and businesses.

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Domestic Market Resilience and Growth

Despite external shocks, India’s economy grew 7.8% in Q1 FY26, driven by private consumption and government spending. GST reforms with simplified tax slabs are expected to boost consumer sectors and capital-intensive industries. Domestic demand and policy continuity underpin market optimism, cushioning the economy from tariff-induced export shocks.

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US-Korea Trade Deal Uncertainties Persist

Ambiguities in the US-South Korea trade agreement, particularly regarding investment commitments and tariff implementations, raise risks of renewed disputes. Experts warn of potential US demands for concessions if trade imbalances persist. The unresolved deal complicates bilateral economic relations and may affect South Korea’s export competitiveness and strategic planning.

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Impact of UK Fiscal Woes on Stock Market

Rising bond yields and fiscal pressures in the UK create mixed effects on equities: potential tax hikes threaten domestic-focused firms, while insurers and asset managers may benefit from higher yields and market volatility. Investor strategies must consider sectoral exposures and macroeconomic risks, affecting portfolio allocations and capital markets dynamics.

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National Investment Strategy Driving Economic Transformation

Launched in 2021, the National Investment Strategy is central to Vision 2030, targeting increased private sector GDP contribution, higher FDI, and expanded non-oil exports. It has facilitated over 800 reforms, attracted regional headquarters of global firms, and set ambitious investment goals to elevate Saudi Arabia into the world’s top 15 economies.

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Sanctions Targeting Russian Support Networks

Ukraine, in coordination with the UK, has imposed sanctions on individuals and companies supporting Russia's defense, energy, and shadow fleet sectors. These measures aim to disrupt Russia's military-industrial capabilities and economic resilience, affecting cross-border trade and complicating business operations involving sanctioned entities, thereby influencing regional economic dynamics.

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Regulatory Framework Against Dumping

Saudi Arabia has strengthened its anti-dumping legal framework, including the 2022 Law of Trade Remedies, to protect local industries from unfair trade practices. This regulatory environment supports Vision 2030 goals by ensuring fair competition, safeguarding domestic manufacturers, and encouraging sustainable industrial growth amid global trade challenges.

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Brazil-US Trade and Political Tensions

US tariffs and sanctions reflect broader geopolitical friction tied to Brazil's internal politics and alignment with China. Despite a US trade surplus with Brazil, tariff measures aim to pressure Brazil's international positioning. The political dispute has limited macroeconomic impact so far but raises risks of escalation, affecting Mercosur dynamics and regional trade stability.

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Euro Currency Stability and FX Market Reactions

The euro has shown resilience despite French political turmoil, with limited immediate impact on EUR/USD exchange rates. However, rising French bond yields and fiscal concerns could pressure the euro if spreads widen further. Currency markets are cautiously monitoring developments, balancing political risks against broader European economic fundamentals and ECB policy signals, which currently favor a hawkish stance.

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Tech Sector and AI Growth Uncertainty

The U.S. tech sector, a major driver of market gains, faces skepticism over sustaining AI-driven growth amid tightening monetary policy and geopolitical constraints, especially regarding China. Earnings volatility and regulatory challenges may dampen investor confidence and affect global technology supply chains.

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Sectoral Impacts of Interest Rate Changes

Interest rate cuts are expected to benefit rate-sensitive sectors such as consumer discretionary, technology (notably AI-related), small and mid-cap companies, and real estate investment trusts (REITs) due to lower capital costs. Conversely, financial sectors may face margin compression despite potential volume gains, while defensive sectors like staples and healthcare might underperform amid increased risk appetite.

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India-Nepal Political Crisis and Economic Risks

Nepal's political unrest disrupts cross-border trade and supply chains, affecting Indian FMCG companies and investments. The crisis accelerates Chinese influence in Nepal, threatening India's economic and strategic interests in the region. Energy cooperation and infrastructure projects face delays, while security concerns rise, necessitating strong diplomatic efforts to maintain regional stability and protect India's economic footprint.

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Strategic Investments from Friendly Nations

Pakistan anticipates $2.9 billion in investments from allies including UAE, Kuwait, Saudi Arabia, Qatar, and Azerbaijan, focusing on energy, agriculture, and infrastructure. These inflows aim to stimulate economic growth, job creation, and development projects, providing critical support amid fiscal pressures and enhancing bilateral economic cooperation in a challenging global environment.

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AI and Technology Sector Growth

Japan's leadership in semiconductor materials, industrial robotics, and quantum computing positions it as a critical player in the global AI supply chain. Companies like Disco, Advantest, and SoftBank are capitalizing on AI-driven investment surges, contributing to stock market gains. This technological edge offers strategic opportunities for investors and strengthens Japan's role in high-tech global value chains.

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Shifting Trade Dynamics and Tariff Policies

The U.S. administration's imposition and threat of tariffs on China, India, and Mexico-related goods create uncertainty in trade flows. Mexico's automotive exports to Canada have surged, but new tariffs and trade tensions could disrupt established supply chains, requiring businesses to reassess sourcing and market strategies amid evolving protectionist measures.

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Consumer Confidence and Domestic Demand

Consumer confidence in Thailand has declined to a 32-month low due to economic recovery concerns, political instability, and trade uncertainties. This dampened sentiment constrains domestic consumption, a vital growth driver, though expectations of government stimulus under new leadership offer potential for sentiment rebound and demand revitalization.

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Foreign Direct Investment Surge

FDI inflows into Saudi Arabia jumped 24% in 2024 to SAR 119 billion ($31.7 billion), with cumulative FDI stock nearly doubling since 2017. The National Investment Strategy and Vision 2030 reforms have fostered a competitive environment, attracting over 50,000 foreign investment licenses and 660 regional headquarters, signaling strong investor confidence and economic diversification.

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Foreign Direct Investment Surge and Factory Leasing

Vietnam attracted $24.09 billion in registered FDI in early 2025, up 27.3% YoY, with manufacturing dominating. A notable trend is the preference for leasing ready-built factories, which accelerates project deployment and reduces upfront costs. This model supports industries requiring agility, such as electronics and medical equipment, reinforcing Vietnam's position as a competitive manufacturing hub amid global supply chain realignments.

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Renewable Energy Growth

Wind and solar power accounted for a record 34% of Brazil's electricity generation in August 2025, driven by rapid capacity expansion and supportive policies. This diversification reduces reliance on hydropower, enhances energy security, and creates economic opportunities. However, grid constraints and curtailments pose challenges, requiring strategic investments to sustain growth and attract further foreign capital.

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Market Volatility and September Risks

September historically brings heightened market volatility, exacerbated by political tensions, tariff uncertainties, and Federal Reserve policy ambiguity. Investors face risks from rising Treasury yields, tech sector corrections, and geopolitical events, leading to cautious portfolio adjustments and potential sell-offs amid concerns over economic growth and fiscal policy.

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Labor Market Slowdown Amid Economic Pressures

The Russian labor market is cooling, with fewer companies planning workforce expansion and a slight rise in layoffs. Economic correction and high borrowing costs affect construction and finance sectors most, while IT, manufacturing, and cybersecurity maintain stable employment and competitive salaries. This slowdown signals weakening domestic demand and potential challenges for consumer-driven growth.

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Political Instability and Economic Impact

Recent political crises, including a failed martial law attempt and presidential impeachment, have undermined investor confidence and economic momentum. This instability exacerbates structural challenges and complicates policy implementation, affecting both domestic economic performance and international business relations.

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Energy Sector Expansion and Oil Production

Iran targets significant oil and gas production increases in the West Karoun fields, leveraging vast reserves and low lifting costs. Chinese and Russian involvement supports development despite sanctions. This expansion aims to sustain export revenues and energy sector growth, but faces risks from renewed sanctions and geopolitical tensions affecting global oil markets and supply chains.

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Robust Foreign Investment Inflows

Egypt ranks 9th globally and 1st in Africa for investment, attracting $46.1bn in FDI during 2023/2024. This influx is driven by Egypt's large labor force, strategic location, competitive tax rates, and trade agreements with 70 countries. The Suez Canal Economic Zone has attracted $10.2bn in investments, enhancing Egypt's position as a regional industrial and logistics hub.

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Labor Market Challenges and Domestic Economic Pressures

China faces rising unemployment, particularly youth unemployment at 17.8%, alongside intense price wars in sectors like electric vehicles. These pressures strain profit margins and consumer spending, complicating Beijing's growth targets. The labor market dynamics and domestic consumption trends are crucial for assessing China's economic resilience and policy effectiveness.

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Impact of Oil Price Volatility on Economy

Declining oil prices, currently around $69 per barrel, have pressured Saudi Arabia's fiscal balance, leading to budget deficits and increased sovereign debt issuance. This volatility challenges public finances and underscores the urgency of economic diversification to reduce dependence on oil revenues and stabilize government spending.

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Anti-Corruption Efforts and Governance Challenges

Ukraine's fight against entrenched corruption is critical for its democratic development and EU accession prospects. Recent political moves to undermine key anti-corruption institutions sparked public backlash, highlighting governance vulnerabilities. Effective anti-corruption reforms are essential to attract foreign investment, ensure transparent reconstruction, and strengthen institutional resilience.

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Australian Stock Market Volatility

The ASX 200 has experienced significant fluctuations driven by rising global bond yields, domestic economic data, and sector-specific dynamics. Financials and energy stocks have faced pressure, while gold miners reached record highs amid safe-haven demand. These market movements reflect investor sensitivity to global fiscal conditions, interest rate expectations, and commodity price shifts, impacting capital allocation and risk management.

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Fiscal Pressures and Reconstruction Spending

The budget deficit forecast increased to 3.6% of GDP due to higher government spending, notably on reconstruction after the 2023 earthquakes. New taxes on households and businesses aim to finance these efforts but add strain on consumers and firms, potentially dampening domestic demand and investment.

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Record Foreign Direct Investment Surge

Mexico experienced a 10.2% increase in foreign direct investment (FDI) in the first half of 2025, reaching a historic $34.27 billion. The surge is driven by reinvested profits and new investments, with the U.S. as the largest investor. This inflow strengthens Mexico's position as a manufacturing and export hub, attracting multinational corporations despite global economic uncertainties.

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Labor Market and Skills Shortages in Manufacturing

The German manufacturing sector faces a critical shortage of skilled labor, with difficulties in securing internships and employment for engineering students. Many companies rely on state contracts to survive, while private sector hiring remains weak. This talent gap threatens innovation, productivity, and the future competitiveness of key industries such as machinery and automotive manufacturing.