Mission Grey Daily Brief - June 09, 2025
Executive Summary
Over the past 24 hours, the world has witnessed major escalations in the war in Ukraine, mounting geopolitical pressures in East Asia, and significant movements in economic policy and trade. The global economy is facing uncertainty, as high-profile U.S. tariffs and retaliatory measures add friction to international trade, and central banks respond with cautious adjustments. On the ground, Ukraine has sustained yet another barrage of Russian missile and drone attacks, killing civilians and devastating infrastructure, while Kyiv’s forces struck back with bold attacks on Russian logistics. Meanwhile, Chinese naval maneuvers near Japan have raised fresh alarm in the region. At the same time, the U.S. government—amid intense political polarization at home—continues to wield trade, defense, and migration as tools of strategic leverage, setting the tone for international business risk. These trends signal a complex and rapidly evolving global risk environment for international businesses.
Analysis
Ukraine: War Escalates, Civilian Toll Mounts, and Uncertainty Reigns
Ukraine has experienced some of the most brutal and comprehensive strikes since the full-scale invasion began over three years ago. In the last 24 hours, Kharkiv was subjected to relentless assaults with guided bombs, kamikaze drones, and missiles; at least six people were killed and many more injured, including children. Elsewhere, Russian forces launched over 200 drones and multiple missile volleys across several Ukrainian cities, suggesting Russia’s retaliation for recent bold Ukrainian drone and sabotage attacks deep within Russian territory, including the destruction of 13 Russian tanks and over 100 armored vehicles on a military railway train [Ukraine Destroy...][Russian attacks...][Latest news bul...][Latest attacks ...].
The escalation in violence comes as political friction also intensifies: President Trump’s administration has publicly criticized President Zelensky for actions perceived as “provoking” Moscow, and recent diplomatic flare-ups in the Oval Office have left the U.S.-Ukraine relationship in uncharted territory [Trump says Zele...][Zelensky Addres...]. Meanwhile, NATO allies, especially the Baltic States, are pushing for a fast-tracked Ukrainian accession to NATO—a scenario Russia has openly warned may provoke an even wider conflict [Day 1,201 of WW...]. U.S. military and economic assistance to Ukraine is now subject to more political wrangling than ever, contributing to pronounced strategic uncertainty.
Business and Geopolitical Implications: The risk of further escalation remains high, not only for Ukraine but for the entire region. Civilian infrastructure, residential areas, and industrial facilities remain at risk, making business continuity planning and regional presence more precarious by the day. Businesses with exposure in post-Soviet states or heavy reliance on supply chains traversing the region must remain vigilant.
U.S., China, and the New Trade War: Tariff Salvos and Industrial Realignments
The U.S. administration has doubled tariffs on steel and aluminum to 50%, with sweeping new or threatened tariffs poised against European and Chinese goods [Global Weekly E...][Business | Jun ...]. President Trump’s trade policy continues to shift rapidly, with proposals for 50% EU tariffs temporarily postponed, creating a climate of uncertainty that is eroding confidence and delaying investment decisions worldwide [Global Weekly E...][World Economic ...]. The effective U.S. tariff rate is reportedly at 14% as of mid-May 2025—a dramatic surge from just 2.5% at the year’s start [World Economic ...].
These tariffs are further compounded by retaliation fears: the European Central Bank (ECB) has continued its campaign of interest rate reductions in an attempt to cushion economic fallout, while the OECD has slashed growth forecasts for both advanced and emerging market economies, explicitly citing unpredictable U.S. policies as a core risk [Charting the gl...][World Economic ...][Global Weekly E...]. China, for its part, is flexing its economic and military muscle: a major Chinese aircraft carrier task group has conducted operations dangerously close to Japanese territory, heightening anxiety among U.S. allies in the region [BREAKING NEWS: ...].
In parallel, business sentiment is being buffeted by fears of further supply chain disruption, increased costs, and the prospect of a more fragmented, protectionist world—a development that favors strategic decoupling and “friend-shoring” among like-minded economies.
Business and Geoeconomic Implications: Conventional supply chains involving China and its satellites are now fraught with strategic and reputational risk, especially given rising scrutiny over labor standards, environmental harm, and autocratic overreach. Businesses are increasingly incentivized to diversify and shift investments to freer, more transparent economies, both in Asia and globally.
U.S. Domestic Volatility and Migration Unrest
Political turbulence in the U.S. is reverberating internationally, not least through immigration policy and the presidential administration’s use of federal military force to intervene in local affairs. Over the weekend, President Trump deployed the National Guard to Los Angeles to quell unrest related to immigration enforcement raids, bypassing the state governor’s authority and sharpening the divide between federal and state governments [News: U.S. and ...][World in brief:...]. The spectacle of federal troops clashing with protesters is likely to intensify social tensions and add layers of reputational and operational risk for companies exposed to U.S. domestic volatility, including those dependent on migrant labor or invested in California’s large and highly international economy.
Business Implications: Companies operating in the U.S.—particularly those engaged in sectors affected by labor mobility, agriculture, or cross-border investment—should closely monitor regulatory shifts, as well as the reputational risk associated with policies seen as heavy-handed or at odds with international human rights norms.
Economic Outlook: Sluggish Growth and Global Policy Crosswinds
The world economy is contending with a slowing growth trajectory. Global GDP growth forecasts have been trimmed to 2.4% for 2025, with the U.S., EU, and China all facing considerable headwinds [World Economic ...][Charting the gl...][Markets & Econo...]. Factors fueling the slowdown include persistent geopolitical uncertainty, disruptions to global trade, and inflationary pressures stemming from tariff escalation. The ECB, India, and several other major economies have cut interest rates, indicating mounting concern over economic fragility and inflation [Charting the gl...][Inflation data,...][Indian Stock Ma...].
Despite these monetary moves, consumer sentiment remains cautious, and international capital allocation is increasingly redirected to markets perceived as more stable, democratic, and rule-bound. This favors continued investment in key Western, Indo-Pacific, and select emerging markets with robust governance.
Business Implications: Investors and corporates should be prepared for continued volatility, especially in trade-exposed sectors. Disciplined risk management, scenario planning, and attention to cross-border political risk premiums are now more essential than ever.
Conclusions
As of June 9, 2025, we find a world facing heightened risk across several dimensions: a deepening and unpredictable war in Europe, a reordering of global trade and political alliances driven by tariff brinksmanship and regional military posturing, and uncertain macroeconomic signals from major central banks. The “free world” and markets grounded in democratic values appear poised to strengthen their global economic and supply chain ties, while autocratic and high-risk jurisdictions face rising isolation and business divestment.
Is the current cycle of escalation, tariffs, and political volatility a short-lived phase, or the new baseline for global business? What new opportunities might arise as companies double down on ethical, resilient, and diversified operations? As global business leaders, are we ready for a world where risk is more diffuse, but also where new alignments with like-minded partners can yield lasting competitive advantages?
The unfolding events demand not just caution but imagination—and a commitment to values-based, forward-looking strategy.
Mission Grey Advisor AI
Further Reading:
Themes around the World:
Foreign Investment and Project Uncertainty
Tariff-related uncertainties have led to a record ₹2 lakh crore worth of foreign projects being halted in Q1 2025, a 1200% increase from last year. Investor pessimism is reflected in a high ratio of dropped to new projects, signaling caution among foreign investors, especially US-based firms, potentially delaying capital inflows and expansion plans.
Construction Sector's Global Expansion
Turkish construction firms have increased their global footprint, with 45 companies ranked among ENR's Top 250 International Contractors, second only to China. Turkish contractors have executed projects worth over $544 billion across 137 countries, enhancing Turkey's influence in global infrastructure and trade, despite global market headwinds.
Stock Market Performance and Investor Sentiment
The EGX30 index experienced modest declines amid regional caution and global monetary policy uncertainties. Local retail investors acted as net buyers, providing market support despite foreign and Arab investor sell-offs. Sectoral divergences reflect economic pressures, with gains in pharmaceuticals and land reclamation contrasting losses in real estate and construction, indicating nuanced investor confidence and market dynamics.
Robust Canadian Bank Earnings
Strong quarterly earnings from major Canadian banks, including Royal Bank of Canada and Bank of Nova Scotia, have bolstered investor confidence and supported the TSX index. These results indicate resilience in the financial sector despite tariff-related risks and economic uncertainties, influencing investment flows and financial market stability in Canada.
Tariff Impact and Exporter Confidence
Despite perceptions of high tariffs, over 90% of Canadian exports to the US currently enter tariff-free under USMCA exemptions. However, tariff uncertainty and recent US tariff hikes on steel, aluminum, and autos have eroded exporter confidence, with many facing cash flow challenges and seeking market diversification to mitigate risks.
Energy Infrastructure Investments
Mexico is investing $800 million in constructing two new thermosolar power plants with a combined capacity of 200 megawatts. This initiative reflects the government's commitment to expanding renewable energy infrastructure, which could enhance energy security, reduce carbon emissions, and attract green investments, positively influencing Mexico's long-term economic sustainability.
Geopolitical Significance and Risks
Pakistan's strategic geography as both a pivot and rimland state places it at the center of global power dynamics. Its proximity to India, China, Central Asia, and the Gulf elevates its geopolitical importance but also exposes it to regional tensions and conflicts. This volatility affects diplomatic relations, trade routes, and foreign investment risk assessments.
Vietnam Real Estate Market Growth
Vietnam's real estate market reached USD 29.5 billion in 2024, with forecasts projecting growth to USD 34.4 billion by 2033. Urban migration, infrastructure projects, and government policies drive demand, especially in satellite cities. Sustainability and smart technologies are increasingly prioritized, attracting foreign investment and supporting long-term sector development.
Limited ECB Intervention Likelihood Amid Fiscal Concerns
The European Central Bank is unlikely to intervene directly to stabilize French bond markets despite rising yields and political risks. The ECB's Transmission Protection Instrument requires sustainable fiscal policies, which France currently lacks due to overspending and political deadlock. ECB reluctance to act increases market pressure on French debt, potentially amplifying borrowing costs and financial market volatility.
Financial Crime Risk and Regulatory Guidance
Canada lags behind allies like the US, UK, and Australia in providing up-to-date, substantive financial crime risk assessments and guidance to banks and businesses. This regulatory gap hampers effective anti-money laundering and terrorist financing efforts, potentially exposing the financial system to increased risks and undermining investor confidence.
India's Robust GDP Growth Amid Global Uncertainty
India's GDP grew unexpectedly by 7.8% in Q1 FY26, driven by strong private consumption and government spending. Despite global headwinds like US tariffs and fragile capital flows, domestic demand remains resilient. Fitch revised growth forecasts upward to 6.9% for FY26, though a slowdown is expected in the second half, reflecting India's structural economic strength and investment appeal.
Chinese Investments via Private Equity Funds
China is increasing indirect investments in South Korea through private equity funds (PEFs), raising economic security concerns. Regulatory gaps allow Chinese capital to gain influence over Korean core technologies and strategic assets, threatening supply chain control. Experts urge Seoul to adopt stricter oversight similar to the US CFIUS system to enhance transparency and protect critical industries from foreign control.
AI-Driven Economic Surge
Taiwan's economy is experiencing a significant boost driven by the AI revolution, with an 8% GDP growth in Q2 2025 and a revised 5.2% forecast for the year. Key players like TSMC and Foxconn dominate the AI chip and cloud hardware markets, positioning Taiwan as a critical hub in global AI supply chains, attracting investment and innovation.
China's Covert Oil Imports
China remains the dominant buyer of Iranian oil, accounting for approximately 90% of exports through covert channels, including disguised shipments. This clandestine trade provides China with discounted crude but faces significant risk if sanctions snapback halts these flows, threatening China's energy security and increasing costs for its refining sector.
Bond Market Volatility and Yield Spreads
The yield spread between French and German 10-year bonds has widened to 80 basis points, reflecting investor concerns over France's fiscal and political outlook. Rising yields increase France's cost of borrowing, potentially crowding out private investment and affecting cross-border capital allocation, with implications for Eurozone financial stability and currency markets.
Sovereign Wealth Fund and State-Owned Enterprises
Indonesia’s sovereign wealth fund, Danantara, managing $1 trillion in assets and nearly 900 state firms, is central to President Prabowo’s economic expansion strategy. It aims to drive growth through commercial investments, but concerns remain about its effectiveness in addressing economic inequality and fiscal sustainability.
Domestic Political Stability and Social Concerns
President Sheinbaum enjoys high approval ratings, yet security remains the top public concern. Political conflicts, including violent incidents in the Senate and opposition criticisms, highlight institutional tensions that could affect governance, investor confidence, and social stability.
Focus on AI, ESG, and Capital Optimization
DBS research highlights Indonesian businesses prioritizing capital optimization, adoption of generative AI, blockchain technologies, and environmental, social, and governance (ESG) principles over the next five years. These strategic shifts aim to drive innovation, operational efficiency, and sustainability, positioning Indonesia to better navigate geopolitical tensions, inflation volatility, and supply chain disruptions in the global economy.
Manufacturing Sector Challenges
Manufacturing sentiment has deteriorated, with the PMI falling below 50, signaling contraction. Export demand is sluggish due to tariffs, while domestic demand remains weak. Rising input costs and competition from cheaper imports exacerbate challenges, threatening the sector's contribution to GDP and employment.
Fiscal Pressures and Economic Stability Risks
The UK faces mounting fiscal challenges with soaring debt levels and borrowing costs reminiscent of the 1976 crisis. Projected deficits and high interest payments threaten public finances, prompting calls for austerity measures amid political and economic uncertainty, potentially impacting investor confidence and economic recovery.
Stock Market Volatility and Foreign Investor Interest
Saudi Arabia's Tadawul stock index showed volatility with recent declines amid weak oil prices, yet foreign investors increased their market share, accounting for 41% of equities buying in late August 2025. Attractive valuations and reforms easing foreign ownership have made Saudi stocks appealing despite domestic institutional sell-offs and oil price uncertainties, signaling potential market recovery.
Monetary Policy and Interest Rate Outlook
Market indicators show diminishing expectations for monetary easing in Taiwan, reflecting confidence in sustained economic growth despite tariff headwinds. Rising interest-rate swaps and government plans for increased military and clean energy spending suggest a tightening monetary environment, influencing investment strategies and financial market dynamics.
Sovereign Debt Issuance Amid Market Turmoil
Turkey's sovereign wealth fund proceeded with significant dollar-denominated bond issuances despite political and market volatility. The use of diverse financing instruments without sovereign guarantees reflects efforts to maintain liquidity and fund public projects, but elevated yields and market sensitivity highlight investor caution and credit risk concerns.
US Tariffs and Trade Barriers
The threat of US tariffs up to 36% on Thai exports intensifies trade uncertainties, pressuring manufacturing sectors and supply chains. Tariff negotiations are linked to geopolitical issues, including the Cambodia ceasefire. Tariffs increase costs, reduce export growth prospects, and accelerate diversification efforts by Thai businesses toward alternative markets.
Monetary Policy and Market Dynamics
Anticipation of Federal Reserve interest rate cuts amid geopolitical and economic uncertainties influences currency valuations and asset prices. Political pressures on the Fed and concerns over its independence add complexity, affecting U.S. Treasury yields, bond markets, and investor confidence, thereby shaping international capital flows and investment strategies.
Bank of Japan's Monetary Policy Dilemma
Despite inflation exceeding targets, the Bank of Japan remains hesitant to aggressively raise interest rates due to weak industrial production and growth concerns. The central bank prioritizes underlying inflation metrics over headline figures, balancing inflation control with economic stability. This cautious stance influences currency valuation, bond markets, and investor expectations, impacting Japan's financial ecosystem and international capital flows.
Norwegian Sovereign Wealth Fund Divestments
Norway's $2 trillion sovereign wealth fund has divested from multiple Israeli companies, including banks and defense-linked firms, citing ethical concerns over involvement in occupied territories. This divestment trend reflects growing international scrutiny and could influence other institutional investors, impacting Israeli firms' access to global capital markets.
Exchange Rate Management and Currency Stability
The Egyptian pound's recent appreciation reflects successful flexible exchange rate policies, robust foreign currency inflows from exports, remittances, and tourism, and high interest rates attracting portfolio investments. While a stronger pound reduces import costs and inflation, it poses competitiveness risks for exports, requiring balanced monetary strategies to sustain economic growth and investor confidence.
Regulatory and Banking Sector Transformations
Mexican banks CIBanco and Intercam are undergoing significant structural changes, including acquisitions and regulatory compliance efforts, to ensure operational continuity amid U.S. sanctions and financial scrutiny. These transitions aim to stabilize the financial sector, protect customers, and maintain investor confidence in Mexico’s banking system.
Capital Market Diversification
The Saudi capital market is expanding beyond equities, with non-listed corporate debt surging over 500% year-on-year to SR1.20 billion in Q2 2025. Government debt instruments also rose significantly. These developments, supported by regulatory reforms, enhance investment options, attract diverse investors, and reduce market volatility, strengthening Saudi Arabia's financial ecosystem.
Tourism Sector Recovery and Challenges
Tourism, a vital pillar contributing over 11% of GDP, shows uneven recovery. While higher per-visitor spending supports revenues, visitor numbers remain below pre-pandemic levels, especially due to geopolitical tensions and safety concerns. Border conflicts and negative advisories have sharply reduced cross-border tourism, impacting local economies and hospitality sectors.
Weak Domestic Consumption and Consumer Sentiment
German retail sales declined by 1.5% in July, with consumer confidence deteriorating due to job security fears and inflation concerns. Despite wage increases, uncertainty and geopolitical tensions suppress household spending, limiting domestic demand's role in economic recovery and affecting sectors reliant on consumer expenditure.
Shift of Foreign Investment to New-Economy Sectors
Multinational corporations are reallocating investments towards China's high-end manufacturing, healthcare, and consumption-driven sectors, reflecting confidence in the country's innovation ecosystem and market potential. This structural transformation underscores China's evolving economic landscape, attracting capital flows that support sustainable growth and global integration in advanced industries.
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.
Corporate Sector Inertia
Pakistan's private sector remains underdeveloped, hindered by decades of state protectionism and risk aversion. This has led to limited capital creation, low foreign direct investment (FDI) of $1.785 billion through April 2025, and a brain drain of talent. The lack of innovation and diversification constrains competitiveness and deters multinational investment, impacting long-term economic growth prospects.
Thailand-Cambodia Border Conflict
Escalating tensions and ceasefire violations along the Thailand-Cambodia border have disrupted bilateral trade and tourism. The conflict threatens billions in cross-border commerce, prompting government support measures for affected businesses and farmers. Prolonged hostilities could severely damage regional supply chains and economic cooperation, necessitating close monitoring by investors and trade partners.