Mission Grey Daily Brief - February 11, 2025

Summary of the Global Situation for Businesses and Investors

The global situation is currently characterised by a brutal conflict in the Democratic Republic of Congo, Trump's trade war, rising tensions in the Middle East, and China's demographic crisis. The conflict in the DRC has the potential to spiral into a wider regional war, impacting mineral-rich regions and displacing civilians. Trump's trade war has led to retaliation from China, with China's economy facing a quadruple blow despite a spending boom. Rising tensions in the Middle East, including a fragile ceasefire between Israel and Hamas, and Iran's threat to shut down the Strait of Hormuz, could have significant implications for global oil trade. China's demographic crisis, marked by a decline in marriages and a shrinking population, poses challenges for the country's long-term economic growth.

Conflict in the Democratic Republic of Congo

The Democratic Republic of Congo (DRC) is currently experiencing a brutal conflict that has the potential to spiral into a wider regional war. The conflict is centred around the eastern region of the country, which is rich in minerals and has never enjoyed much stability. The Rwanda-backed rebel group M23 has made significant advances in the region, seizing the capital of North Kivu state and moving south to expand its territory. The humanitarian consequences of the violence are profound, with sexual violence as a weapon of war, children forced to fight, and millions displaced. The conflict is the latest episode of a decades-long struggle in the region, with about 6 million people killed and more than 3 million displaced in the most recent fighting.

The DRC is a prime example of the "resource curse", where an abundance of raw materials leads to authoritarian regimes and civil wars. The country has approximately $24 trillion worth of natural resources, including cobalt, copper, niobium, tantalum, coltan, diamonds, gold, silver, zinc, manganese, tin, uranium, and coal. However, about a fifth of its population relies on aid to survive. The weak state institutions and corrupt governments have failed to benefit the people or invest in essential infrastructure.

The regional summit aimed at ending the violence ended with a call for an immediate and unconditional ceasefire. However, many fear that a ceasefire is less likely than escalation to a wider regional war. The fate of civilians in the region, who are frequently the subject of ethnically targeted attacks, is at stake.

Trump's Trade War

Trump's trade war has led to retaliation from China, with China's economy facing a quadruple blow despite a spending boom. The deflationary crisis in China is compounded by sluggish domestic consumption, an out-of-character production slump, and the recent imposition of tariffs from the United States. As the world's leading industrial manufacturer and top exporter of goods, the health of the Chinese economy has profound knock-on effects for global supply chains and markets.

If China remains trapped in its deflationary spiral, an influx of cut-price Chinese goods into global markets could create intense competitive pressures for global manufacturers. As the world's second-largest importer, a weakened Chinese economy could slash demand for foreign products and deprive exporters of a critical marketplace.

Trump has indicated that he is open to a deal and might not impose tariffs if countries agree to buy more US products, particularly its oil and gas. However, the seemingly ad hoc nature of Trump's announcements of tariffs has caused chaos, confusion, and some abrupt about-faces. The practical difficulties and costs of collecting duties from massive volumes of relatively low-value items have also been a major factor.

Rising Tensions in the Middle East

Rising tensions in the Middle East could have significant implications for global oil trade. A fragile ceasefire between Israel and Hamas is at risk, with Hamas accusing Israel of breaking parts of the agreement. Trump's proposed U.S. takeover of Gaza after the war has the potential to inflame tensions in the region.

Iran's armed forces have warned that they could shut down the Strait of Hormuz if ordered by top officials, a move that would disrupt global oil trade. The Strait of Hormuz is a vital waterway for global energy markets, handling about 20 percent of the world's oil trade. Any disruption could trigger a surge in oil prices and escalate tensions between Iran and Western nations.

China's Demographic Crisis

China is facing a demographic crisis, marked by a decline in marriages and a shrinking population. The number of marriages in China fell to 6.1 million last year, 20% lower than in 2023 and down by more than 50% since 2013. The marital malaise is part of a bigger demographic crisis facing China. Although China boasts the world's second-largest population, at 1.4 billion people, the country's population is declining.

Until 2015, the state enforced a "one-child" policy to avoid urban overcrowding. However, since then, the high costs of child care and education have stymied government efforts to encourage people to have children. The shrinking population poses challenges for the country's long-term economic growth and social stability.

Conclusion

The global situation is currently characterised by a brutal conflict in the Democratic Republic of Congo, Trump's trade war, rising tensions in the Middle East, and China's demographic crisis. These events have the potential to impact global supply chains, markets, and oil trade, as well as regional stability and social cohesion. Businesses and investors should closely monitor these developments and consider their potential impact on their operations and investments.

Themes around the World:

Cybersecurity Regulation and Investment Surge

Israel is advancing comprehensive cyber laws and attracting significant investment in cybersecurity startups. New regulations will require real-time reporting of attacks, affecting hundreds of critical companies and shaping compliance, risk management, and business continuity strategies.

Disinflation Path and Rates

The CBRT and IMF signal continued disinflation but still-high prices: inflation fell from 49.4% (Sep 2024) to 30.9% (Dec 2025), with end‑2026 seen near ~23%. Policy-rate cuts remain gradual, shaping demand, credit, and business financing costs.

Allied defence-industrial deepening (AUKUS)

AUKUS-related procurement and wider defence modernisation continue to reshape industrial partnerships, technology controls and security vetting. Suppliers in shipbuilding, cyber, advanced manufacturing and dual-use tech may see growth, but face stricter export controls, sovereignty requirements and compliance burdens.

Red Sea security and shipping risk

Persistent Red Sea/Bab al-Mandab insecurity continues to reshape routes, insurance premia, and inventory buffers. Saudi ports signal readiness for major liner returns when conditions stabilise, but businesses should plan dual-routing, higher safety stock, and supplier diversification for regional flows.

Defense-driven simulation procurement

Finland’s heightened security posture is accelerating procurement of training, mission rehearsal and synthetic environments across NATO-compatible standards. This expands demand for simulators, XR devices and secure networks, creating export opportunities but raising compliance, security-clearance and supply-chain assurance requirements.

Outbound investment screening expands

New U.S. outbound investment restrictions for semiconductors, quantum, and advanced AI create approval or notification burdens for cross-border deals and R&D. Companies must reassess Asia tech exposure, ring-fence sensitive IP, and build deal timelines around regulatory review risk.

Labor Market Tightness and Transformation

The US labor market remains tight, with low unemployment and rising wages, while technological adoption and immigration policy shifts are transforming workforce dynamics. These trends impact talent acquisition, operational costs, and long-term competitiveness for both domestic and international firms.

Mining Sector Pressures and Logistics

Mining output declined 2.7% in late 2025 due to falling coal and iron ore production, rising costs, and logistical constraints. Global trade tensions, especially with the US and China, further threaten export volumes and investor confidence in this critical sector.

Human Rights, Sanctions, and Diplomacy

China’s use of sanctions in response to foreign criticism—especially on human rights—remains a diplomatic lever. Recent lifting of sanctions on UK politicians signals selective engagement, but ongoing concerns over governance and rights continue to affect reputational and operational risks.

Trade-Driven Logistics and Port Demand Swings

Tariff uncertainty is already distorting shipping patterns, with importers attempting to ‘pull forward’ volumes ahead of duties and then cutting orders. The resulting volatility elevates congestion, drayage and warehousing costs, and demands more flexible routing and inventory buffers.

FX controls and dong volatility

Vietnam’s USD/VND dynamics remain sensitive to global rates; the SBV set a central rate at 25,098 VND/USD (Jan 27) while authorities prepare stricter penalties for illegal FX trading under Decree 340/2025 (effective Feb 9, 2026). Hedging and repatriation planning matter.

Financial compliance, post-greylist tightening

After exiting FATF greylisting and EU high-risk listing, regulators are tightening AML/CFT oversight. The FIC is moving to require richer geographic and group-structure disclosures for accountable institutions, increasing compliance workloads, KYC expectations and potential enforcement exposure for cross-border groups.

Tech export controls tighten supply

Expanded controls on AI chips, advanced semiconductors, and tooling constrain sales into China and other sensitive markets, while raising compliance burdens worldwide. Firms must redesign products, segment customer access, and harden end‑use diligence to avoid penalties and sudden shipment stoppages.

Tech investment sentiment and resilience

Israel’s innovation ecosystem remains a core investment draw, but conflict-linked volatility and talent constraints influence funding conditions and valuations. Companies should stress-test R&D continuity, cyber risk, and cross-border collaboration, while watching for policy incentives supporting strategic sectors.

Foreign investment approvals and regulation drag

Multinational CEOs report slower, costlier approvals and heavier compliance. OECD ranks Australia highly restrictive for foreign investment screening; nearly half of applications exceeded statutory timelines, and fees have risen sharply. Deal certainty, transaction costs and time-to-market are increasingly material planning factors.

Energy export diversification projects

Canada is accelerating west-coast export optionality, including proposals for an Alberta-to-Pacific crude line and expansion of export routes. This could reshape long-term offtake, shipping, Indigenous partnership requirements, and permitting timelines for investors.

Foreign Investment Scrutiny Intensifies

Australian authorities are tightening scrutiny of foreign investment, especially in strategic sectors like rare earths. Recent government actions to force divestment of Chinese-linked stakes in Northern Minerals reflect heightened national interest concerns, affecting deal certainty for international investors.

Canada-China Strategic Trade Pivot

Canada’s new agreement with China lowers tariffs on Chinese EVs and secures reduced Chinese tariffs on Canadian agriculture. This shift diversifies trade but risks US retaliation, reshapes supply chains, and could attract Chinese investment in Canadian manufacturing and energy sectors.

Tariff volatility and litigation

Aggressive, frequently revised tariffs—often justified under emergency authorities—are raising input costs and retail prices while chilling capex. Ongoing court challenges, including a pending Supreme Court ruling, create material uncertainty for exporters, importers, and contract pricing through 2026.

Long-term LNG security push

Utilities are locking in fuel amid rising power demand from data centers and AI. QatarEnergy signed a 27‑year deal to supply JERA about 3 mtpa from 2028; Mitsui is nearing an equity stake in North Field South (16 mtpa, ~$17.5bn). Destination clauses affect flexibility.

Reforma tributária do IVA dual

A transição do IBS/CBS avança com a instalação do Comitê Gestor do IBS e regulamentação infralegal pendente; implementação plena ocorrerá gradualmente até 2033. Empresas devem preparar sistemas fiscais, precificação e créditos, além de mapear efeitos setoriais e contencioso.

Consolidation and cross-border M&A wave

A growing pipeline of regional-bank mergers and portfolio shrinkage is reshaping local banking competition. Consolidation can reduce relationship lending, alter treasury-service pricing, and force corporates to re-paper facilities—creating execution risk for acquisitions, capex projects, and vendor financing.

Dual-use tech and connectivity controls

Ukraine is tightening control over battlefield-relevant connectivity, including whitelisting Starlink terminals and disabling unauthorized units used by Russia. For businesses relying on satellite connectivity and IoT, this signals stricter verification requirements, device registration, and heightened cyber and supply risks.

Shifting Trade Partnerships and Diversification

US unpredictability has prompted partners like India, the EU, and others to seek alternative trade relationships, including new deals with China. This diversification reduces US leverage, alters global trade flows, and impacts long-term market positioning for multinationals.

USMCA review and tariff risk

The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.

Escalating sanctions and secondary risk

The EU’s 20th package expands energy, banking and trade restrictions, adding 43 shadow-fleet vessels (around 640 total) plus more regional and third‑country banks. This raises secondary-sanctions exposure, contract frustration risk, and compliance costs for global firms transacting with Russia-linked counterparts.

Shadow fleet interdictions rising

Western navies are shifting from monitoring to physical interdiction: boardings, detentions and possible seizures of ‘stateless’ or falsely flagged tankers are increasing. Russia is reflagging vessels; ~640 ships are sanctioned. Shipping, port, and insurance risk premiums are rising materially.

Tariff Volatility and Legal Risk

U.S. tariff policy is highly fluid, with threatened hikes on key partners and the Supreme Court reviewing authority for broad “reciprocal” duties. This uncertainty raises landed-cost volatility, complicates contract pricing, and increases incentive for regionalizing production and sourcing.

Baht strength and financing conditions

The baht appreciated strongly in 2025 and stayed firm into 2026, pressuring export and tourism competitiveness while lowering import costs. With possible rate cuts but rising long-end yields, corporates face mixed funding conditions, FX hedging needs, and margin volatility.

Foreign creditor feedback loops

Japan’s >$1 trillion Treasury holdings and yen-defense dynamics create a two-way risk channel: FX interventions could trigger Treasury sales, pushing US yields higher. This threatens global risk-off episodes, impacts dollar funding, and raises hedging and refinancing costs worldwide.

Tighter tech export controls

BIS continues tightening—and sometimes recalibrating—controls on advanced computing, AI chips, and semiconductor equipment tied to China. Firms must manage licensing, end-use checks, and diversion risk through third countries, raising costs and delaying shipments in sensitive tech ecosystems.

Infrastructure Investment Spurs Opportunities

Major federal investments under the Infrastructure Investment and Jobs Act are modernizing US transportation, energy, and digital networks. These initiatives create significant opportunities for construction, technology, and green energy sectors, while also improving long-term supply chain efficiency.

Critical minerals investment opportunities, risks

Ukraine is advancing licensing and production-sharing models for strategic minerals, including lithium projects with large capex (reported up to US$700m initial; longer-term >US$1.8bn). Potential upside is high for EU battery supply chains, but war-risk insurance, permitting integrity, and infrastructure security remain decisive.

Gas and LNG project constraints

New EU measures include bans on maintenance and services for LNG tankers and icebreakers, tightening pressure on Russian LNG export projects and Arctic logistics. This increases delivery uncertainty, reduces long‑term offtake reliability, and complicates energy‑intensive investments.

Supply Chain Disruptions and Labor Shortages

Sectors like agriculture face acute labor shortages, especially for durian exports, and logistical bottlenecks at border crossings. These challenges are compounded by stricter Chinese inspections and container shortages, impacting supply chain reliability and export competitiveness.

India trade deals intensify competition

India’s new EU deal and evolving US tariff arrangements reduce Pakistan’s historical preference cushion, especially in textiles and made-ups. European and US buyers may renegotiate prices and lead times, pressuring margins and accelerating shifts toward higher value-add, reliability, and compliance performance.