
Mission Grey Daily Brief - February 22, 2025
Summary of the Global Situation for Businesses and Investors
The global situation remains tense, with Russia's full-scale invasion of Ukraine entering its third year and hundreds of thousands killed or wounded, tens of thousands missing, and millions of refugees. Ukrainian forces, outnumbered and outgunned, struggle to hold back Russia's slow but steady advances. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the U.S. Congress, where defending Ukraine from Russia has had bipartisan support. Trump's embrace of Russia represents a major about-face in U.S. foreign policy, echoing Putin's narrative and signalling a desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia.
Meanwhile, Australia warns airlines over Chinese 'live fire' exercises, Sweden investigates a cable break in the Baltic Sea, and Israel mourns the return of the remains of four murdered hostages, including Shiri Bibas, her son Ariel, and baby Kfir.
Ukraine-Russia War
The Russia-Ukraine war continues to be a significant concern for businesses and investors, with hundreds of thousands killed or wounded, tens of thousands missing, and millions of refugees. Ukrainian forces, outnumbered and outgunned, struggle to hold back Russia's slow but steady advances. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the U.S. Congress, where defending Ukraine from Russia has had bipartisan support. Trump's embrace of Russia represents a major about-face in U.S. foreign policy, echoing Putin's narrative and signalling a desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia.
The Ukrainian people are rallying around a defiant President Volodymyr Zelenskyy, who publicly criticized Trump for promoting Russian "disinformation", with public trust in Zelenskyy at 57%. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the U.S. Congress, where defending Ukraine from Russia has had bipartisan support. Trump's embrace of Russia represents a major about-face in U.S. foreign policy, echoing Putin's narrative and signalling a desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia.
The Ukrainian people are rallying around a defiant President Volodymyr Zelenskyy, who publicly criticized Trump for promoting Russian "disinformation", with public trust in Zelenskyy at 57%. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the U.S. Congress, where defending Ukraine from Russia has had bipartisan support. Trump's embrace of Russia represents a major about-face in U.S. foreign policy, echoing Putin's narrative and signalling a desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia.
China-Australia Tensions
Australia has warned airlines about Chinese 'live fire' exercises, with Foreign Minister Penny Wong confronting her Chinese counterpart over drills off the east coast. This follows EAM Jaishankar's meeting with Chinese Foreign Minister Wang on the sidelines of the G20 meet, where they discussed the Ukraine war and the need for a peaceful resolution. Jaishankar also met with U.S. Secretary of State Antony Blinken, where they discussed the importance of the Indo-Pacific region and the need to counter China's growing influence.
Baltic Sea Cable Break
Swedish authorities are investigating a damaged cable discovered in the Baltic Sea, the latest in a string of recent incidents of ruptured undersea cables that have heightened fears of Russian sabotage and spying in the region. Late last month, authorities discovered damage to the undersea fiber-optic cable running between the Latvian city of Ventspils and Sweden's Gotland. A vessel belonging to a Bulgarian shipping company was seized but later released after Swedish prosecutors ruled out initial suspicions that sabotage caused the damage. The most recent break was found off the island of Gotland, south of Stockholm, in the Swedish economic zone, with the cable running between Germany and Finland. Prime Minister Ulf Kristersson said the government takes all reports of damage to infrastructure in the Baltic Sea very seriously.
Israel-Hamas Conflict
Israel mourns the return of the remains of four murdered hostages, including Shiri Bibas, her son Ariel, and baby Kfir. Hamas handed over the remains under a shaky ceasefire deal, but Israel's military said the body returned was not that of Shiri Bibas. Russia is preparing to declare victory in its war with Ukraine within days, following a public falling out between Trump and Zelenskyy and U.S. pressure to do a deal.
Further Reading:
Australia warns airlines over Chinese ‘live fire’ exercises
BBC forced to apologise as EastEnders star says a racial slur live on air
Elon Musk Wields Chainsaw Gifted To Him By Argentina President "For Bureaucracy"
G20 Meeting | EAM S Jaishankar Meets Chinese FM Wang On The Sidelines Of G20 Meeting | News18
Hamas hands over remains of four Israeli hostages including two children
Holly Willoughby faces new court battle as her media company is ordered to pay eye-watering tax bill
Israel continues to mourn as bodies of murdered hostages returned
Sweden is investigating a cable break in the Baltic Sea
Ukrainians Rally Around Zelensky as Trump and Putin Denigrate Him
Ukrainians rally around their president after Trump seeks to denigrate him
Ukrainians rally around their president after Trump’s harsh comments
Themes around the World:
Economic Growth and Fiscal Outlook
Thailand's GDP growth is modest, projected at around 2.2% in 2025 with risks of slowing further. Fiscal pressures from rising public debt and aging-related expenditures constrain government spending capacity. While inflation remains low, sustaining growth requires effective fiscal stimulus and investment in infrastructure and innovation to counter external headwinds.
Ukraine's Strategic Attacks on Russian Oil Infrastructure
Ukraine's intensified drone strikes on Russian oil refineries and export hubs have disrupted nearly half of Russia's seaborne crude exports, causing fuel shortages and price surges within Russia. These attacks undermine Russia's energy revenues, a key war funding source, while contributing to global oil market volatility. The strikes also provoke retaliatory measures, including export bans, affecting global energy supply chains and pricing dynamics.
Advancements in AI and Technology Sectors
Japanese firms in semiconductors and AI-related technologies, such as Advantest and SoftBank Group, are driving market gains and positioning Japan as a key player in the global AI supply chain. This technological leadership attracts investment and supports long-term growth prospects in high-value industries.
Currency Volatility and Ruble Depreciation
The Russian ruble has experienced significant depreciation, losing 10-12% of its value against major currencies since mid-2025. Currency volatility increases transaction risks for international trade and investment, complicates import pricing, and contributes to inflationary pressures, thereby affecting business planning and profitability.
USD/CAD Exchange Rate Volatility
The Canadian dollar's exchange rate fluctuates in response to U.S. economic data, Federal Reserve policy expectations, and commodity prices. These dynamics affect trade competitiveness, import-export costs, and investment decisions, necessitating vigilant currency risk management for businesses engaged in cross-border operations.
Rare Earths as Geopolitical Hedge
China's control over rare earth elements, critical for semiconductors and defense, positions these minerals as strategic geopolitical hedges. Export restrictions in 2023 highlighted supply chain vulnerabilities. Investors are increasingly aware of rare earths' role in portfolio resilience amid global trade tensions and technological competition.
Security Challenges and Investor Confidence
Escalating insurgency and terrorism, particularly in Balochistan and Khyber Pakhtunkhwa, have heightened security risks. Attacks on critical infrastructure, including CPEC projects, have increased insurance costs and delayed investments. This volatile security environment undermines investor confidence, restricts business operations, and contributes to capital outflows despite modest increases in FDI.
Economic Growth and Investment Challenges
South Africa's GDP growth has modestly improved to around 0.8%-1.2%, driven by manufacturing, trade, and mining. However, fixed investment continues to contract, limiting sustainable growth. Structural reforms and increased private-sector participation are critical to unlocking investment and achieving meaningful economic expansion necessary to reduce poverty and inequality.
Uneven Domestic Consumption Recovery
Taiwan’s internal demand recovery is polarized, with strong industrial growth contrasting weak consumer spending and service sector performance. Factors such as labor shortages, inflation, and US tariff impacts suppress consumption. The commercial services sector faces recession risks, highlighting structural challenges in balancing export-driven growth with robust domestic market development.
US Tariffs and Trade Uncertainty
US-imposed tariffs on Thai exports, including a 19% levy, disrupt trade flows and compel supply chain recalibrations. These tariffs, alongside uncertainties over transshipment rules, undermine Thailand's export competitiveness, prompting businesses to seek alternative markets or relocate production, thereby affecting foreign direct investment and industrial policy priorities.
Economic Reforms and National Development Narrative
The government launched a comprehensive economic narrative emphasizing private sector-led growth, debt reduction, and export expansion aligned with Egypt Vision 2030. Structural reforms include state-owned enterprise restructuring and unified licensing platforms, aiming to improve efficiency, attract investment, and sustain long-term economic stability, critical for business operations and foreign partnerships.
Vietnam's Banking Sector Resilience
S&P upgraded credit ratings for major Vietnamese banks, reflecting improved asset quality and financial system resilience. The banking sector benefits from strong domestic deposits and accommodative monetary policy, with non-performing loans declining. However, high private sector credit-to-GDP ratios and regulatory gaps pose risks. Ongoing reforms and government support are critical to sustaining stability amid external uncertainties.
Federal Reserve Independence Under Threat
U.S. President Trump's attempts to influence Federal Reserve decisions, including firing governors and pressuring rate cuts, threaten the Fed's autonomy. This politicization risks undermining monetary policy credibility, increasing market volatility, inflation, and borrowing costs, with potential destabilizing effects on U.S. and global financial markets.
Corporate Sector Outlook Amid Tariffs
Brazilian companies face mixed prospects due to US tariffs and macroeconomic conditions. Key firms like Embraer and Gerdau show resilience and growth potential, while others like GPA face governance uncertainties. The trajectory of the Brazilian real and interest rates will influence corporate investment and operational strategies in the near term.
Oil Sector Vulnerability and Export Disruptions
South Sudan's economy is heavily dependent on oil exports, primarily transported through Sudan's pipeline infrastructure. Recent pipeline closures and drone attacks on key transit facilities have disrupted crude flows, threatening export revenues and economic stability. These disruptions pose significant risks to supply chains and investor confidence in the oil sector.
Political Instability and Economic Impact
Thailand's persistent political instability hampers long-term policy implementation, undermining investor confidence and economic growth. Frequent leadership changes and policy shifts deter consistent industrial development, particularly in key sectors like electric vehicles and semiconductors. This instability risks slowing GDP growth to around 2%, affecting trade, investment, and supply chain stability.
Korean Firms' Massive US Investments
South Korean conglomerates pledged approximately $150 billion in investments across US manufacturing sectors, creating nearly 1.66 million US jobs. This strategic move aims to mitigate tariff impacts and strengthen bilateral economic ties, though it raises questions about domestic job creation and long-term economic effects in South Korea.
Climate Change and Flood Impact
Severe climate-induced floods have devastated key agricultural regions, destroying up to 60% of rice crops and 35% of cotton production in Punjab. This has disrupted food supplies, increased inflation, and strained fiscal resources. The ongoing climate crisis threatens rural livelihoods, economic growth, and necessitates urgent investment in resilience, infrastructure, and international climate finance.
US-China Trade Tensions and Regional Pivot
Despite a temporary truce, US-China trade tensions persist with risks of tariff escalations. China is pivoting trade focus towards Southeast Asia and strengthening ties with BRICS nations to reduce US dependency. These shifts impact global trade flows, supply chains, and geopolitical alignments affecting international business strategies.
Financial Sector Resilience and Banking Upgrades
S&P Global Ratings upgraded credit ratings of major Vietnamese banks, reflecting improved asset quality and macroeconomic stability. The banking sector benefits from strong deposit bases and accommodative monetary policy, though credit risks remain due to high private sector leverage. Regulatory reforms and enhanced governance aim to strengthen financial system resilience amid external uncertainties.
EU Support and Security Initiatives for Ukraine
The EU emphasizes strengthening support for Ukraine, including defense investments and initiatives like 'The Eastern Shield.' While political rhetoric remains cautious, sustained EU backing is critical for Ukraine's security and economic recovery, influencing investor confidence and regional stability in the face of Russian aggression.
Brazil's Economic Performance and Outlook
Brazil's economy slowed to 0.4% growth in Q2 2025 but outperformed forecasts, driven by services and extractive industries. Inflation cooled slightly, aided by energy discounts, but remains above target, keeping interest rates high. The central bank signals possible rate cuts in 2026 amid cautious optimism. Economic resilience amid external shocks supports investor confidence but growth challenges persist.
Commodity Price Pressures and Supply Chain Effects
Rising raw coffee bean prices due to poor Brazilian harvests and US tariffs have led to retail price hikes, affecting consumer markets. Supply chain volatility and climate impacts exacerbate cost pressures in key agricultural exports, influencing global commodity markets and Brazilian producers' profitability.
Water Scarcity and Climate Impact Risks
Turkey faces significant water scarcity challenges exacerbated by climate change, impacting agriculture, industry, and urban development. Water resource management and sustainability are critical for long-term economic resilience, requiring policy reforms and infrastructure investments to mitigate risks.
U.S. Tariff Policies and Trade Compliance Challenges
U.S. tariff measures, including a 20% duty on Vietnamese exports, influence trade dynamics and supply chain strategies. The U.S. pressures ASEAN countries to curb transshipment of Chinese goods through Vietnam, tightening rules on origin certification and labeling. These developments compel Vietnam to strengthen compliance and governance, impacting export operations and investor confidence.
Fiscal Challenges Impacting UK Stock Market
Rising bond yields and fiscal concerns create mixed implications for UK equities. Multinational companies may be insulated from domestic tax hikes, while insurers could benefit from higher yields improving investment income. Asset managers might capitalize on increased market volatility. However, tax increases and economic uncertainty pose risks to domestic-focused firms, influencing portfolio strategies and investor sentiment.
Tariff Uncertainty Impacting Exporters
US tariffs and trade tensions have dampened Canadian exporters' confidence, with 36% facing cash flow challenges. Despite exemptions under CUSMA, uncertainty persists, prompting exporters to diversify markets and increase domestic sales. This environment complicates trade planning and investment decisions, potentially slowing export growth and affecting supply chain resilience.
Mexican Stock Market Volatility
The S&P/BMV IPC index reached historic highs but experienced fluctuations due to global economic data, US policy uncertainty, and domestic political developments. Market volatility impacts investor sentiment and capital allocation, with sectors like mining, finance, and infrastructure showing mixed performance, requiring careful portfolio management.
Impact on Euro and Currency Markets
Political turmoil and fiscal uncertainty in France have pressured the euro, causing volatility against major currencies like the US dollar and sterling. A weakening euro could affect trade competitiveness and cross-border investment returns, while currency fluctuations add risk to multinational operations and supply chain contracts denominated in euros.
Investment Climate and Market Sentiment
Despite tariff-induced volatility and foreign portfolio outflows, India remains a top investment destination due to strong fundamentals, government reforms, and resilient domestic demand. Equity markets face near-term risks from earnings pressures and private capex lag but benefit from monetary easing, fiscal stimulus, and a sovereign credit rating upgrade, supporting medium-term investor confidence.
Currency Appreciation Impact on Exporters
The Taiwan dollar's sharp appreciation, rising about 12% in 2025, has pressured exporters by eroding revenues and margins, notably affecting giants like TSMC and Foxconn. Smaller manufacturers face heightened risks due to limited hedging. The central bank's cautious interventions aim to stabilize markets amid trade tensions and speculative inflows, with significant implications for Taiwan's export-driven economy.
Economic Performance and Growth Prospects
Brazil's economy grew 0.4% in Q2 2025, driven by services and extractive industries, despite slowing from Q1. Household consumption remains resilient, supported by government measures, while investments face headwinds from high borrowing costs. The medium-term outlook is cautious, with growth projections around 2.2-2.5%, amid domestic fiscal challenges and external trade tensions.
Volatility in Mexican Financial Markets
Mexican equity markets exhibit volatility influenced by global risk aversion, U.S. monetary policy uncertainty, and domestic political developments. Bond yields have surged, and stock indices fluctuate amid mixed inflation data and geopolitical tensions, challenging investor confidence and complicating capital allocation decisions in Mexico.
Monetary Policy Easing Amid Inflation Decline
The Central Bank of Egypt cut key interest rates by 200 basis points in August 2025, reflecting cooling inflation and robust economic growth. Lower rates aim to stimulate investment and consumption while maintaining currency stability. This monetary easing supports business operations and investment strategies but requires careful monitoring of inflation and external vulnerabilities.
US-Mexico Trade Tensions
Ongoing trade disputes between the US and Mexico, including tariff threats and regulatory uncertainties, create volatility impacting bilateral trade flows, supply chains, and investment decisions. The US administration's protectionist measures and Mexico's responses influence market sentiment and complicate cross-border commerce, necessitating strategic risk management for businesses operating in both countries.
Taiwan's Semiconductor Industry Leadership
Taiwan remains the global leader in semiconductor manufacturing, producing over 60% of the world's chips and 90% of advanced nodes. TSMC's substantial investments in domestic and international fabs, including in the US and Europe, reinforce its technological edge. The industry's rapid innovation cycles, especially driven by AI demand, underpin Taiwan's economic strength and global supply chain influence.