Mission Grey Daily Brief - June 18, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains tense, with several ongoing conflicts and crises impacting the world economy and presenting challenges for businesses and investors. Here is a summary of the key developments:
- Ukraine-Russia Conflict: The war in Ukraine continues with no clear end in sight. A Swiss peace conference brought together 80 countries, calling for Ukraine's territorial integrity as the basis for peace. However, key players like Russia and China were absent, and some developing nations, like India, Mexico, and Saudi Arabia, did not fully commit to the final declaration. This highlights ongoing divisions in the international community regarding the conflict.
- Ukraine-Russia Conflict: Businesses and investors should monitor the situation closely, as the conflict's impact on global markets and supply chains continues. Consider supply chain diversification and contingency plans, especially for businesses reliant on Eastern European and Russian markets.
- North Korea-Russia Relations: The deepening ties between Russia and North Korea could have implications for security and stability in the region. Businesses and investors should stay informed about potential arms deals and technology transfers, which may impact sanctions and the availability of certain technologies.
- China-Australia Relations: The stabilization of ties between China and Australia may provide opportunities for increased trade and investment. However, businesses should be aware of ongoing human rights concerns, which could impact public perception and consumer sentiment.
- Denmark-Russia Tensions: Businesses and investors, especially in the energy sector, should monitor the situation as Denmark targets Russia's shadow oil fleet. This could impact oil prices and supply chain stability, affecting businesses reliant on stable energy supplies and those operating in the region.
The conflict has led to a significant increase in defense spending among NATO allies, with a record 23 of 32 members hitting their targets this year. This reflects concerns about European security and a recognition of the threat posed by Russia. There is a focus on strengthening alliances, with Sweden and Finland joining NATO, and European nations providing updated arms and training to Ukraine.
North Korea-Russia Relations
Russian President Vladimir Putin's visit to North Korea has deepened the alignment between the two countries as they face Western sanctions. There are concerns about arms deals and technology transfers between Russia and North Korea, which could impact the Korean Peninsula and East Asian stability. Putin's visit comes amid rising tensions on the Korean Peninsula, with North Korea conducting weapons tests and joint military exercises involving the US, South Korea, and Japan.
China-Australia Relations
Chinese Premier Li Qiang's visit to Australia marked a stabilization of ties between the two countries, following a period of friction. Trade and investment discussions were a key focus, with China being Australia's largest trading partner. However, human rights issues, including the case of a jailed Australian writer, Yang Hengjun, whose death sentence was upheld ahead of Li's visit, remain a point of contention.
Denmark-Russia Tensions
Denmark is planning to take action against Russia's shadow oil fleet in the Baltic Sea, aiming to disrupt their sanctions-evading oil exports. This fleet includes around 1,400 vessels, and Denmark is engaging with other Baltic Sea states and EU members to coordinate a response. This could impact oil prices and Russia's revenue, with potential consequences for the global energy market and businesses dependent on stable energy supplies.
Recommendations for Businesses and Investors
Further Reading:
Australia's Albanese, China's Li to Discuss Trade, Jailed Writer - U.S. News & World Report
Australia's prime minister raises journalist incident with China's Li - Yahoo News Canada
Dozens Of N Korea Soldiers Cross Border, Get Injured After Landmines Explode - NDTV
Five Residents Of Volatile Tajik Region Extradited By Russia - Radio Free Europe / Radio Liberty
How will Denmark impede Russia's shadow oil fleet in the Baltic Sea? - Offshore Technology
Themes around the World:
Nuclear expansion and export-linked cooperation
Seoul is restarting new reactors (two 1.4GW units plus a 700MW SMR) while pursuing expanded US civil nuclear rights and fuel-cycle cooperation. This reshapes electricity price expectations, industrial siting, and opportunities for EPC, components, and uranium services.
Disinflation and rate-cut cycle
Inflation has eased into the 1–3% target, with recent readings near 1.8% and markets pricing further Bank of Israel rate cuts. Lower borrowing costs may support demand, but a stronger shekel can squeeze exporters and reshuffle competitiveness across tradable sectors.
US–Taiwan reciprocal trade pact
A newly signed U.S.–Taiwan trade agreement caps U.S. tariffs at 15% and exempts 2,072 product categories, cutting average tariffs to ~12.33%. Taiwan will liberalize most U.S. imports and commit large purchases (e.g., US$44.4B LNG/crude) affecting sourcing strategies.
India–US tariff reset framework
An interim India–US trade framework cuts many US duties on Indian goods to about 18% (from punitive levels), with contingent zero‑tariff carveouts later. In return, India may lower tariffs/NTBs for selected US goods, reshaping export pricing and compliance.
Coût de l’énergie industrielle
La facture énergétique industrielle a reculé en 2024 (−24% à 17,3 Md€), mais reste ~1,5 fois 2019. L’électricité a baissé (−28% en 2024) après hausse 2023. Compétitivité, pricing et décisions de localisation restent sensibles aux marchés.
BoE rate path uncertainty
A knife-edge Bank of England hold and markets pricing near-term cuts create volatility for sterling, funding costs and credit conditions. Sticky services inflation alongside weak growth raises risks of sudden repricing, affecting investment timing, hedging and demand forecasts.
Trusted cloud, data sovereignty requirements
France is accelerating ‘cloud de confiance’ policies (SecNumCloud) for sensitive data and public-sector workloads, encouraging shifts away from non‑qualified providers. Multinationals face procurement constraints, data‑hosting redesign, vendor selection changes, and potential localization-related compliance costs.
Rising wages and labor tightness
Regular wages rose 3.09% in 2025 to NT$47,884, with electronics overtime at 27.9 hours—highest in 46 years—reflecting AI-driven demand and labor constraints. Cost inflation and capacity bottlenecks may pressure contract terms, automation capex, and talent retention strategies.
Regional connectivity projects at risk
Strategic infrastructure tied to Iran, such as Chabahar/INSTC routes, faces uncertainty as partners reconsider funding under U.S. pressure and expiring waivers. This threatens diversification of Eurasian supply corridors, increasing reliance on other routes and reducing redundancy for time-sensitive cargo.
Critical minerals re-shoring push
Canberra is accelerating onshore processing and ‘strategic reserve’ policies for critical minerals, backed by allied frameworks and subsidies. Recent antimony shipments highlight momentum, while lithium refining faces cost pressure. Expect incentives, permitting scrutiny, and partner-linked offtake deals.
Suudi kaynaklı yenilenebilir yatırım dalgası
Suudi şirketlerinin yaklaşık 2 milyar dolarlık 2.000 MW güneş yatırımı ve toplam 5.000 MW planı, 25 yıllık alım garantileri ve %50 yerlilik şartı içeriyor. Ekipman tedariki, EPC, finansman ve yerli içerik uyumu; enerji fiyatları ve şebeke bağlantı kapasitesi üzerinde etki yaratabilir.
Selic alta e volatilidade
Com Selic em 15% e inflação de 12 meses em 4,44% (perto do teto de 4,5%), o BC sinaliza cortes graduais a partir de março, sem guidance longo. A combinação de juros e incerteza fiscal afeta crédito, câmbio, hedges e decisões de capex.
Labor shortages, immigration and automation
A cabinet plan targets admission of ~1.23 million foreign workers by March 2029 across 19 shortage sectors, while new political voices advocate replacing labor with AI. Companies must plan for wage inflation, onboarding/compliance, and accelerated automation to stabilize operations.
Souveraineté numérique et cloud
L’État pousse la migration de données sensibles vers des clouds européens (OVH, Scaleway) pour réduire la dépendance aux GAFAM. Cela influence marchés publics, choix d’hébergement et conformité (résidence des données), et crée des opportunités pour fournisseurs IT européens.
AI chip export controls to China
Policy oscillation on allowing sales of high-performance AI chips to China creates strategic risk for chipmakers and AI users. Companies must manage compliance, customer screening, and geopolitical backlash, while potential future tightening could disrupt revenue, cloud infrastructure, and global AI deployment plans.
Red Sea shipping risk remains
Houthi attacks on Israel-linked vessels are suspended but explicitly conditional on Gaza dynamics, leaving a high-risk maritime environment. Any renewed escalation could re-trigger strikes, raising insurance premia, forcing Cape reroutes, and disrupting Israel-bound supply chains and schedules.
Institutional and legal-policy volatility
Moves by the legislature to influence Constitutional Court appointments and broader governance debates underscore institutional risk. For investors, this can translate into less predictable judicial review, permitting outcomes, and enforcement consistency—especially in regulated sectors like mining, environment, and infrastructure.
Nearshoring growth meets constraints
Mexico continues attracting manufacturing and logistics investments, especially in northern and Bajío corridors, but execution risk is rising from land, permitting, utilities, and labor availability. Firms should stress-test project schedules, supplier capacity, and cross-border throughput assumptions.
Migration tightening, labour shortages
Visa rule tightening is depressing skilled-worker and student inflows; analysts warn net migration could turn negative for the first time since 1993. Sectors like construction, care and health face hiring frictions, lifting wage pressure and constraining delivery timelines for UK operations.
Labor regulation and strike liability
The “Yellow Envelope” law taking effect March 10 broadens “employer” to include subcontractors and limits damages claims against strikers. Foreign chambers warn reduced predictability and higher labor-dispute exposure, especially for manufacturers and logistics operators using layered contracting models.
Anti-corruption tightening and governance
A new Party resolution on anti-corruption and “wastefulness” is set to intensify prevention, post-audit controls, and enforcement in high-risk sectors. This can reduce informal costs over time, yet heightens near-term compliance risk, procurement scrutiny, and potential project delays during investigations.
Dados e regulação digital (LGPD)
A ANPD foi transformada em agência reguladora, com autonomia e nova carreira de fiscalização, elevando probabilidade de enforcement. Para multinacionais, isso aumenta exigências de governança de dados, contratos com terceiros, transferências internacionais e resposta a incidentes, influenciando custos de compliance e reputação.
Tokenised gilts and DSS scaling
UK is piloting tokenised government bonds (DIGIT) using HSBC’s blockchain within the Digital Securities Sandbox, advancing on-chain settlement. This could reshape post-trade workflows, collateral mobility, and vendor selection for brokerages and investment platforms serving global clients.
Sanctions and export-control compliance
Australia’s alignment with US/UK/EU sanctions and tightening controls on sensitive technologies and dual-use goods raise compliance burden for multinational supply chains. Screening of counterparties, end-use verification and licensing timelines can affect shipping schedules and deal execution.
Amazon logistics faces social pushback
Indigenous protests blocked access to Cargill’s Santarém terminal and pressured the government to revoke an order enabling Amazon port expansion and pause dredging plans. Export corridors for soy/corn (Northern Arc) face heightened operational disruption, permitting risk, and reputational exposure.
Supply-chain reshoring for semiconductors
Policy priorities emphasize strengthening strategic supply chains, with rising power demand from semiconductor manufacturing and data centers. Expect continued incentives for domestic/ally-based chip capacity, stricter resilience requirements for tier suppliers, and competition for skilled labor, land, grid connections, and water.
Manufacturing incentives and localization
India continues industrial policy via PLI-style incentives and strategic missions spanning electronics, textiles, chemicals, and MSMEs. International manufacturers should evaluate local value-add requirements, supplier development, and potential WTO challenges, especially in autos and clean tech.
Budget 2026 capex-led growth
Union Budget 2026–27 targets a 4.3% fiscal deficit with ₹12.2 lakh crore capex, prioritizing roads, rail corridors, waterways, and urban zones. Expect improved project pipelines and demand, but also procurement scrutiny and execution risk across states.
Currency volatility, hedging and controls
Rupee volatility intensified with tariff shocks, USD/INR swinging toward ~92 before easing near ~90 on trade relief. RBI’s forward positions and reserve mix (gold ~13.6% of ~US$687bn reserves) can cap appreciation, elevating FX hedging costs and treasury policy complexity.
USMCA renegotiation and exit risk
With the mandatory USMCA review approaching, Washington is signaling tougher rules of origin and reshoring demands, while President Trump has mused about withdrawal. This uncertainty raises tariff and compliance risk across North American supply chains, investment plans, and cross-border pricing.
US/EU trade enforcement risk
Vietnam’s export boom faces rising trade-remedy scrutiny. Recent U.S. antidumping/countervailing duties include hard empty capsules with 47.12% dumping and 2.45% subsidy rates, signalling broader enforcement risk. Exporters should strengthen origin compliance and diversify end-markets.
EV supply-chain localization rules
Proposed “100% US-made” requirements for federally funded EV chargers would effectively stall parts of the build-out, given reliance on imported power modules and electronics. This raises uncertainty for EV infrastructure investors, equipment suppliers, and downstream fleet electrification plans.
Arctic LNG logistics sophistication
Russia is scaling ship-to-ship LNG transfers in Murmansk, including Arctic LNG 2-linked cargoes routed toward China’s Beihai. Complex Arctic logistics can keep volumes moving but raise traceability, insurance, and counterparty risks; EU LNG policy uncertainty remains a key swing factor.
Defense-tech boom and controls
War-driven demand is accelerating Israel’s defense-tech ecosystem (defense startups reportedly rising from 160 to 312). This supports growth but increases scrutiny of dual-use exports, compliance burdens, and reputational considerations for partners, investors, and supply chains touching defense.
Financial system tightening and liquidity
Banking reforms—phasing out credit quotas and moving toward Basel III—may reprice credit and widen gaps between strong and weak lenders. With credit-to-GDP above 140% and periodic liquidity spikes, corporates may face higher working-capital costs and tougher project financing.
Mortgage stress and domestic demand
CMHC flags rising mortgage stress in Toronto and Vancouver; over 1.5M households have renewed at higher rates and another ~1M face renewal soon. A consumer slowdown could weaken retail, construction, and SME credit demand, while increasing counterparty and portfolio risk.