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Mission Grey Daily Brief - February 20, 2025

Summary of the Global Situation for Businesses and Investors

The US and Russia have begun peace talks in Riyadh to end the war in Ukraine, without the presence of Ukraine or European officials. US President Donald Trump has criticised Ukrainian President Volodymyr Zelenskyy for not holding elections and accused him of living in a Russian "disinformation bubble", while Zelenskyy has accused Trump of succumbing to Russian disinformation and repeating Kremlin narratives. Trump's commerce secretary, Howard Lutnick, has promised to sell off his business holdings and supported Trump's hardline trade policies, including plans to impose import taxes on US trading partners. Mexico has threatened to sue Google over the "Gulf of America" name change in its map service following Trump's order.

US-Russia Peace Talks

The US and Russia have begun peace talks in Riyadh to end the war in Ukraine, without the presence of Ukraine or European officials. US President Donald Trump has criticised Ukrainian President Volodymyr Zelenskyy for not holding elections and accused him of living in a Russian "disinformation bubble", while Zelenskyy has accused Trump of succumbing to Russian disinformation and repeating Kremlin narratives. US and Russian officials have agreed to appoint high-level teams to negotiate the end of the war and restore American-Russian relations. European governments have demanded a role in peace talks, alarmed at the possibility of being sidelined from negotiations that will determine the future security of the continent.

The US and Russia have held the highest-level talks to date between the two former Cold War foes, without the presence of Ukraine or European officials. US President Donald Trump has criticised Ukrainian President Volodymyr Zelenskyy for not holding elections and accused him of living in a Russian "disinformation bubble", while Zelenskyy has accused Trump of succumbing to Russian disinformation and repeating Kremlin narratives. US and Russian officials have agreed to appoint high-level teams to negotiate the end of the war and restore American-Russian relations. European governments have demanded a role in peace talks, alarmed at the possibility of being sidelined from negotiations that will determine the future security of the continent.

The US and Russia have held the highest-level talks to date between the two former Cold War foes, without the presence of Ukraine or European officials. US President Donald Trump has criticised Ukrainian President Volodymyr Zelenskyy for not holding elections and accused him of living in a Russian "disinformation bubble", while Zelenskyy has accused Trump of succumbing to Russian disinformation and repeating Kremlin narratives. US and Russian officials have agreed to appoint high-level teams to negotiate the end of the war and restore American-Russian relations. European governments have demanded a role in peace talks, alarmed at the possibility of being sidelined from negotiations that will determine the future security of the continent.

The US and Russia have held the highest-level talks to date between the two former Cold War foes, without the presence of Ukraine or European officials. US President Donald Trump has criticised Ukrainian President Volodymyr Zelenskyy for not holding elections and accused him of living in a Russian "disinformation bubble", while Zelenskyy has accused Trump of succumbing to Russian disinformation and repeating Kremlin narratives. US and Russian officials have agreed to appoint high-level teams to negotiate the end of the war and <co: 1,3


Further Reading:

Donald Trump calls Zelensky ‘a dictator’ after Ukraine’s leader accuses him of living in ‘disinformation space’

Mexico Threatens to Sue Google Over ‘Gulf of America’ Change

Musk boasts about ‘thrashing bureaucracy’ as Trump expands power grab over independent agencies – US politics live

Senate confirms Howard Lutnick as commerce secretary, a key role for Trump’s trade agenda

Trump Brands Zelensky 'A Dictator'

Trump blames Ukraine over war with Russia, saying it could have made a deal

Trump calls Ukraine's Zelenskyy a ‘dictator,' escalating a spat between the leaders

Trump’s new world: US and Russia begin Ukraine peace talks

US and Russia meet without Ukraine for first talks on ending war

Zelensky says Trump lives in ‘disinformation space’

Themes around the World:

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Suspension of Western Financial Services in Russia

Major Western financial information providers and payment networks, including S&P Global, PayPal, Visa, and Mastercard, have suspended operations in Russia. This withdrawal restricts access to global financial infrastructure, complicates cross-border transactions, and increases operational risks for businesses engaged with or within Russia.

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Brazil 3PL Market Expansion

The Brazilian third-party logistics (3PL) market is projected to grow at a CAGR of 7.49% through 2033, driven by e-commerce growth, infrastructure investments, and digital transformation. This expansion enhances supply chain efficiency and offers opportunities for logistics outsourcing, critical for domestic and international trade.

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US Dollar Volatility and Global Economic Risks

Bank of America warns of two-way risks for the US dollar amid uncertain Federal Reserve policies, global economic health, and geopolitical tensions. Dollar appreciation could hurt US exports, while depreciation may fuel inflation. This unpredictability complicates trade, investment strategies, and financial market stability, demanding adaptive risk management from investors and policymakers.

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Geopolitical Uncertainty and US Policy Shifts

US policy towards Ukraine exhibits volatility, balancing between supporting Kyiv militarily and seeking conflict de-escalation with Russia. This strategic ambiguity, influenced by domestic political considerations and shifting alliances, introduces uncertainty for international stakeholders regarding the conflict’s trajectory and the stability of Western support.

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Economic Fragmentation and Portfolio Diversification

The global economic order is shifting from globalization to fragmentation, with rising trade barriers and geopolitical shocks. Traditional portfolio diversification is less effective as equities and bonds increasingly move in tandem. Investors are turning to private markets, commodities, and less macro-sensitive assets to build resilience against inflation and growth shocks.

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Shift in Russia’s Sovereign Wealth Fund Strategy

Russia plans to halt foreign currency sales from its National Wealth Fund by 2026, signaling a strategic pivot towards reduced reliance on foreign currencies and increased domestic financial autonomy. This recalibration aims to insulate the economy from external shocks and sanctions, potentially affecting global forex markets and Russia’s fiscal stability.

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Profit Warnings Reflect Business Uncertainty

UK-listed companies, especially in Yorkshire and the Midlands, report fewer but still significant profit warnings, driven by weaker consumer confidence, geopolitical uncertainty, contract delays, and tariff impacts. This signals ongoing operational challenges and margin pressures across sectors like construction, industrials, and retail, affecting investment and supply chain decisions.

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Geopolitical Risks from Rare Earths Deal

Thailand's MoU with the US on rare earth minerals supply chain development risks straining diplomatic ties with China, the dominant global rare earth supplier. While enhancing Thailand's strategic positioning and tariff negotiation leverage with the US, the deal raises concerns over environmental impacts and potential entanglement in US-China trade tensions, affecting trade flows and foreign investment.

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Japanese Yen Depreciation and Currency Volatility

The yen has weakened to multi-decade lows against the US dollar, influenced by divergent monetary policies, fiscal expansion, and geopolitical uncertainties. Yen depreciation enhances export competitiveness but raises import costs and inflation risks, affecting supply chains and cross-border trade dynamics. Currency volatility poses challenges for multinational corporations and investors managing FX exposure.

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Financial Market Volatility and Investor Sentiment

Indian financial markets exhibit volatility influenced by global uncertainties, persistent foreign institutional investor outflows, and mixed corporate earnings. Despite domestic institutional buying and supportive macroeconomic indicators, cautious investor sentiment prevails. Key sectors like Metal, IT, and FMCG face pressure, while Financials and Banking provide partial support. Market direction remains sensitive to inflation data, trade negotiations, and geopolitical developments.

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Garment Industry Recovery and Challenges

Vietnam's textile and garment sector rebounded with 7.7% export growth in early 2025, moving towards higher value-added products and new markets like the Middle East. Nonetheless, high production and logistics costs, reliance on imported raw materials, and US tariff impositions challenge competitiveness. The sector is adopting automation and green technologies but requires stronger financial and supply chain support to sustain growth.

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Thailand's Stock Market Revival

Thailand's equity market is expected to rebound strongly in Q4 2025, driven by improved corporate earnings, easing US-China tensions, and government stimulus programs like 'Khon La Khrueng Plus.' This recovery enhances investor confidence, benefiting sectors such as tourism, finance, infrastructure, and technology, and signals improved conditions for foreign and domestic investment.

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Media Freedom and Political Stability Risks

Rising violations against media and labeling of Islamabad and Punjab as dangerous for journalists reflect deteriorating political stability and governance challenges. Political unrest and civil-military tensions exacerbate investor risk perceptions, undermining confidence in policy continuity and security, which are vital for attracting and retaining international trade and investment.

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Iran’s Regional Influence via Iraq Politics

Iran's influence in Iraq faces challenges amid parliamentary elections and internal Shi’ite faction rivalries. Maintaining leverage over Iraqi security and economic sectors is vital for Tehran's regional strategy. A diminished foothold could reduce Iran's geopolitical clout, impacting regional stability and economic corridors critical for trade and energy transit.

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Structural Economic Challenges

Germany faces persistent structural issues including supply chain disruptions, skilled labor shortages, and demographic pressures. These factors constrain growth, increase costs, and strain social welfare systems, threatening long-term economic stability and competitiveness in global markets.

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Geopolitical Tensions and China Relations

Germany’s geopolitical standing is weakening amid strained relations with China, including canceled diplomatic visits and threats of export bans on critical rare earths. The country faces risks from overdependence on Chinese supply chains and must navigate complex US-China trade tensions impacting its industrial base and foreign policy.

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Crypto Market Regulation and Decline

South Korea’s cryptocurrency trading volume has plummeted by over 40%, with major exchanges like Upbit and Bithumb facing liquidity losses. Regulatory scrutiny and market maturation have shifted investor focus toward traditional equities. Potential designation of crypto firms as financial conglomerates signals increased oversight, affecting market dynamics and investor confidence in digital assets.

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Investment and Job Market Contraction

Over one-third of German companies plan job cuts in 2026, particularly in industry, amid declining investment intentions. The prolonged investment slump and rising insolvencies signal deteriorating business confidence, threatening employment and economic recovery prospects.

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Investment Trends Favoring US Economy

Despite global uncertainties, the US remains the top investment destination for the next 18 months, driven by robust capital expenditure in technology and AI sectors. BlackRock highlights strong GDP growth and a reversal of asset outflows to Europe, underscoring sustained investor confidence amid fiscal and geopolitical headwinds.

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EU-US Strategic Competition in Turkey

The EU and US intensify efforts to deepen defense and economic ties with Turkey, exemplified by major jet deals and defense cooperation initiatives. This rivalry reflects Turkey's strategic NATO role and geopolitical importance. While economic interests dominate, concerns over rule of law and human rights persist, influencing Turkey's international relations and investment environment.

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Asset Management and Mutual Fund Industry Growth

Global asset managers like State Street, BlackRock, and Amundi are intensifying focus on India's burgeoning mutual fund sector, targeting a retail investor base nearing $1 trillion in assets. Despite recent equity market volatility, sustained mutual fund inflows and robust IPO activity reflect a maturing investment culture. This trend signals growing domestic capital mobilization and diversification opportunities for international investors in India's financial markets.

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Trade Policy and Regional Integration

South Africans broadly support open trade and greater African representation in international affairs. The government is leveraging regional frameworks like the African Continental Free Trade Area to enhance economic integration and diversify trade partnerships, aiming to mitigate the impact of external tariffs and geopolitical shifts on key export sectors.

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Government Investment Facilitation

The Thai government is accelerating investment approvals via the Fast Pass system to unlock over 470 billion baht in pending projects. Focus sectors include modern agriculture, semiconductors, EVs, and wellness. Legal reforms and public-private funding mechanisms like the Thailand Infrastructure Fund aim to boost economic recovery and attract FDI amid fiscal discipline concerns.

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Crypto Regulation and Corporate Digital Asset Risks

Japan is reviewing regulatory frameworks for companies holding significant digital assets amid rising corporate losses in crypto portfolios. Enhanced governance and reporting requirements are anticipated, impacting corporate treasury strategies, investor confidence, and the broader fintech ecosystem.

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Ruble's Vulnerability Amid Sanctions

The Russian ruble remains decoupled from market fundamentals due to sanctions but faces long-term depreciation pressures. Economic stress, tight monetary policy, and declining export revenues contribute to currency weakness. This volatility complicates financial planning and cross-border transactions for businesses operating in or with Russia.

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Global Market Reactions to US Tech and Geopolitics

Global markets are influenced by US tech sector earnings and geopolitical developments. Strong earnings from Amazon and Apple boost US market futures, while US-China trade truce reduces tariffs and restores some trade flows. However, currency fluctuations and commodity price shifts reflect ongoing uncertainties, underscoring the interconnectedness of technology performance and geopolitical events in shaping market momentum.

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US Tariffs Impact on Exports

The imposition of punitive US tariffs, reaching up to 50%, on Indian exports, particularly textiles, gems, and seafood, poses a significant risk to India's export-oriented sectors. This trade friction disrupts supply chains, reduces competitiveness, and threatens employment in MSMEs, challenging India's trade relations and export growth, especially with its largest market, the US.

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Impact of Sanctions on India’s Energy Trade

US sanctions on Russian oil companies compel Indian refiners to cease contracts with Rosneft and Lukoil, forcing a reallocation of crude imports towards Middle Eastern and African sources. While increasing procurement costs, India balances geopolitical pressures with energy security needs, illustrating the complex interplay between sanctions, global energy markets, and emerging economies’ trade strategies.

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Robust Equity Market Performance

The Ibovespa index surged 28% in 2025, driven by sectors such as real estate, essential services, and banking. Foreign capital inflows and expectations of interest rate cuts underpin this rally. However, exporters faced headwinds from currency appreciation and commodity price declines, highlighting sectoral disparities and the influence of global monetary policies on investment flows.

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Impact of Chinese Rare Earth Export Controls

China's export bans on rare earth minerals pose supply chain risks for Taiwan's chip production. Although TSMC has diversified sources and buffers, indirect effects such as increased costs and supply disruptions remain concerns, highlighting Taiwan's vulnerability to Chinese trade policies and the need for supply chain diversification.

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Foreign Reserves and Fiscal Discipline

Egypt's net international reserves surpassed $50 billion in October 2025, marking a historic milestone. This strong reserve position supports exchange rate stability, import coverage, and external debt servicing. Concurrently, public debt has been reduced by about 10% of GDP over two years, reflecting effective fiscal consolidation and enhancing macroeconomic stability and sovereign creditworthiness.

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E-commerce Market Expansion

Turkey's e-commerce market is experiencing explosive growth, projected to reach $1.77 trillion by 2033 with a 25.18% CAGR. This surge is fueled by widespread smartphone adoption, social media influence, and digital payment platforms, enabling SMEs to access global markets. The expansion diversifies foreign currency sources, enhances market liquidity, and transforms retail and export landscapes, presenting significant opportunities for investors and businesses.

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Impact of Russia Sanctions on French Economy

Sanctions on Russia have a relatively limited direct impact on the French economy, with exposure to Russian gas at about 20%. However, French companies face dilemmas regarding continued operations in Russia amid reputational risks and geopolitical pressures. The situation affects supply chains, corporate strategies, and compliance risks for international investors.

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Political Leadership and Market Optimism

The election of Sanae Takaichi as Japan's first female prime minister has energized investors, driving stocks to record highs. Her pro-growth policies, including increased defense spending, nuclear energy revival, and fiscal stimulus, have boosted confidence despite political instability. This leadership shift is reshaping investment strategies, favoring sectors aligned with her agenda and attracting global capital seeking diversification.

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Corporate Credit and Borrowing Challenges

Rising credit risks and borrowing costs in Brazil have led companies to scale back or cancel debt issuance plans. This credit market tightening constrains corporate financing, affecting expansion and investment activities, and signals increased caution among investors in Latin America's largest economy.

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Fiscal Expansion Under Takaichi

Japan's new Prime Minister Sanae Takaichi signals a shift towards strategic fiscal expansion focusing on productivity-enhancing investments in defense, technology, energy, and cybersecurity. This approach aims to modernize Japan's economy, attract foreign investment, and boost long-term competitiveness, impacting global investors and supply chains by reinforcing Japan's industrial base amid geopolitical tensions.