Mission Grey Daily Brief - June 19, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains complex and dynamic, with several key developments shaping the geopolitical and economic landscape. Firstly, the relationship between Russia and North Korea is deepening, as evidenced by Russian President Vladimir Putin's visit to Pyongyang, raising concerns in the West about a potential military partnership. Secondly, tensions on the Korean Peninsula are escalating, with South Korea firing warning shots at North Korean soldiers who crossed the border. Thirdly, China's technological support for Russia's invasion of Ukraine is fueling tensions with the West, while also competing with the US for influence in the Philippines. Lastly, Turkey's economy is projected to grow stronger than expected in 2024, according to Fitch Ratings, despite ongoing challenges with high inflation.

Russia-North Korea Relations Deepen

The relationship between Russia and North Korea is attracting increased attention as Russian President Vladimir Putin made a two-day visit to North Korea, meeting with North Korean leader Kim Jong Un. This marks Putin's first trip to the country in 24 years and signifies deepening ties between the two nuclear-armed states. The summit focused on expanding military cooperation, with concerns raised about potential transfers of advanced military technology to North Korea in violation of UN Security Council resolutions. Both countries face heavy sanctions from the West and are seeking to counter these through alternative trade and payment systems. The US and its allies are closely monitoring the situation, highlighting the potential impact on security in Europe, Asia, and the US homeland.

Tensions Escalate on the Korean Peninsula

Tensions on the Korean Peninsula have escalated as South Korea fired warning shots at North Korean soldiers who temporarily crossed their heavily-mined land border. This incident, the second of its kind this month, comes amid rising tensions between the two countries, with North Korea intensifying weapons tests and the US, South Korea, and Japan conducting joint military exercises. Additionally, North Korea has been increasing construction activity in border areas, including installing anti-tank barriers and planting landmines. The situation is delicate, with the countries technically still at war since the 1950-1953 conflict.

China-US Competition Intensifies

The competition between China and the US is intensifying, with both powers jostling over trade, technology, and influence in various regions. China's provision of technology to Russia, particularly microelectronics, is prolonging Russia's invasion of Ukraine, leading to calls for consequences by NATO Secretary-General Jens Stoltenberg. Meanwhile, in the Philippines, a controversial report alleging a US disinformation campaign to discredit the effectiveness of China's Sinovac vaccine during the COVID-19 pandemic has damaged trust in the US and benefited Beijing in their geopolitical rivalry. This incident underscores the complexities of great power competition and the potential for unintended consequences.

Turkey's Economic Outlook

Turkey's economy is projected to perform better than expected in 2024, according to Fitch Ratings, with a growth rate of 3.5% in 2024, up from the previous forecast of 2.8%. However, Turkey continues to face challenges with high inflation, which is expected to end the year at 43%. The central bank has implemented a series of aggressive interest rate hikes to curb inflation, which is expected to gradually decrease over the next two years. Turkey's economic growth is driven by robust domestic demand, and the country benefits from its strategic location connecting Chinese advantages with international advantages.

Risks and Opportunities

Risk: The deepening Russia-North Korea relationship poses risks of increased military cooperation and technology transfers, which could enhance North Korea's nuclear capabilities and further destabilize the region.
Opportunity: Turkey's stronger-than-expected economic growth provides opportunities for investors, particularly in sectors benefiting from robust domestic demand.
Risk: Tensions on the Korean Peninsula could escalate further, impacting regional stability and potentially triggering a wider conflict.
Opportunity: Denmark's efforts to impede Russia's "shadow fleet" of tankers carrying sanctioned oil through the Baltic Sea may provide opportunities for alternative energy suppliers to fill the gap in the market.

Themes around the World:

Vision 2030 Economic Diversification Drive

Saudi Arabia’s Vision 2030 continues to drive economic transformation, reducing oil dependency and expanding into sectors like mining, tourism, and technology. This shift is attracting record foreign investment, opening new markets, and reshaping the business environment for international firms.

Sanctions Enforcement and Geopolitical Risk

France has escalated enforcement of Russia-related sanctions, including high-profile maritime interdictions. This raises compliance risks for energy, shipping, and finance sectors, and signals a stricter stance on trade with sanctioned entities, impacting supply chain security.

Transatlantic Trade Tensions Escalate

The UK faces heightened uncertainty as the US threatens tariffs on British goods, linked to broader disputes over Greenland and European sovereignty. These measures risk delaying the UK-US trade deal, disrupting supply chains, and increasing costs for export-driven sectors.

Export Diversification and Market Shift

China has offset declining US trade by expanding exports to Africa (up 26.5%), Southeast Asia (up 14%), and Latin America (up 8%). This diversification strategy reduces reliance on Western markets, strengthens ties with the Global South, and reshapes global trade flows.

Workforce Development and Talent Mobility

Industrial growth and nearshoring are driving demand for skilled labor, prompting national upskilling initiatives. TN visas facilitate Mexican talent mobility to the US, while labor shortages and wage pressures in both countries are reshaping hiring strategies and operational models.

Energy Transition: Nuclear and Renewables

South Korea is advancing its energy transition by planning two new nuclear reactors by 2038 and emphasizing renewables to meet carbon neutrality goals. This shift will influence industrial energy costs, supply chain sustainability, and investment in green technology sectors.

Export Growth Amid Currency and Tariff Risks

Thailand’s exports surged 16.8% in December 2025, but a stronger baht and new U.S. tariffs threaten competitiveness. Export growth is expected to slow in 2026, with ongoing uncertainties around trade policy and global demand affecting business planning.

Administrative Delays and Bureaucratic Risks

The rapid rollout of new shelter regulations has strained local planning offices, causing project approval delays. This increases operational risk for developers and international investors, with potential for missed deadlines and higher holding costs.

Supply Chain Realignment for Shelter Materials

The new legal requirements are driving increased demand for specialized construction materials, ventilation, and reinforced concrete. This is prompting supply chain adjustments, nearshoring strategies, and opportunities for international suppliers, but also risks of bottlenecks and price volatility.

Record EBRD and Foreign Investment Inflows

The EBRD invested a record €2.7 billion in Turkey in 2025, with 91% in the private sector. Major projects include infrastructure and post-earthquake reconstruction, underlining Turkey’s long-term investment appeal and resilience.

Technology Regulation and Data Security

US regulatory scrutiny over technology, data privacy, and AI is intensifying, with new rules affecting cross-border data flows and digital operations. Companies must adapt to evolving compliance landscapes, impacting investment decisions and digital supply chain strategies.

US Secondary Sanctions on Iran Trade

The US imposed a 25% tariff on all countries trading with Iran, significantly affecting global energy and commodity flows. This move, alongside new sanctions on Iranian entities, increases compliance risks and operational complexity for multinationals engaged in cross-border trade, especially in energy and finance.

Currency Volatility and Fiscal Reforms

The South African rand has shown recent strength, supported by improved fiscal management, credit rating upgrades, and inflation control. However, volatility remains a risk, influenced by global economic shifts, policy changes, and domestic fiscal vulnerabilities, affecting import costs and investment planning.

Surge in Used EV Market Drives Battery Reuse

France’s used electric vehicle market grew 30% in 2025, with battery longevity and second-life applications now critical. This trend boosts demand for battery reuse solutions, influencing investment strategies and the structure of aftersales and recycling supply chains.

Slow Progress on Energy Transition

Despite ambitious targets, France’s decarbonization rate slowed to 1.6% in 2025, far below the 4.6% annual reduction needed for 2030 goals. Dependence on fossil fuels and policy delays increase regulatory and reputational risks for energy-intensive industries.

Discounted Russian Oil Reshapes Markets

Deep discounts on Russian crude—up to $35 per barrel below Brent—have shifted market dynamics, particularly in Asia. While this supports Russian export volumes, it erodes state revenues and creates volatility in global oil pricing, affecting competitors and downstream industries worldwide.

Geopolitical Tensions and Security Risks

Ongoing cross-strait tensions with China, including military posturing and economic coercion, create persistent risks for business continuity, supply chain stability, and foreign investment in Taiwan. The region remains a flashpoint with global ramifications for trade and security.

Labor Market Weakness Amid Economic Growth

While US GDP growth remains strong, job creation has slowed, with unemployment rising to 4.4%. AI-driven productivity gains and reduced immigration contribute to a decoupling of growth from employment, raising social and political risks for businesses dependent on domestic demand.

Real Estate Market Correction and Recovery

Major Canadian cities have seen steep declines in real estate transactions and prices since 2021, with Toronto and Vancouver at multi-decade lows. While 2026 is forecast as a recovery year, high mortgage renewal rates and affordability issues will continue to influence investment and consumer demand.

Compliance Costs and ESG Barriers in EU Trade

While the EU FTA offers tariff-free access, Indian exporters face high compliance costs from the EU’s carbon border tax and ESG standards. These non-tariff barriers could offset gains, especially for steel, aluminum, and emission-intensive sectors, requiring strategic adaptation by businesses.

Critical Supply Chain Vulnerabilities

The UK’s over-reliance on China for clean energy components and critical minerals exposes supply chains to geopolitical shocks. Disruptions could threaten up to 90,000 jobs and delay renewable energy projects, prompting calls for domestic production and diversified international partnerships.

Agricultural and Resource Export Diversification

Australia continues to diversify export markets and products, leveraging new trade agreements and investments in minerals, agriculture, and technology. However, exposure to external shocks—such as Chinese trade actions or global commodity price swings—remains a significant risk for international investors and supply chains.

Stricter Environmental and Import Regulations

New regulations require burn-free certification for feed corn and wheat imports, aligning with global sustainability standards. These rules increase compliance costs for importers and may disrupt agricultural supply chains, especially for animal feed and food processing sectors.

Legal and Institutional Unpredictability

Despite ongoing conflict, investors cite legal uncertainty and institutional inefficiency as greater deterrents than war itself. Prolonged court proceedings, lack of transparency, and unpredictable regulatory enforcement undermine trust, affecting investment decisions and long-term supply chain planning.

Strategic Partnerships With India Deepen

Germany is strengthening economic and technological ties with India, highlighted by new trade, defense, and green energy agreements. The Indo-German partnership, with bilateral trade exceeding $50 billion in 2024, is positioned to enhance supply chain resilience, innovation, and investment flows, especially as Germany seeks diversification beyond China and the US.

Semiconductor Reshoring and Taiwan Deal

A landmark US-Taiwan trade agreement lowers tariffs to 15% and secures $250 billion in Taiwanese semiconductor investment, with TSMC expanding US operations. This accelerates domestic chip manufacturing, reshapes supply chains, and heightens strategic rivalry with China, affecting global tech sector dynamics.

Liberalized Real Estate Laws Attract Foreigners

Recent amendments allow foreign ownership of Saudi land, sparking international interest in major urban and tourism projects. The new framework is reshaping the real estate sector, drawing investors and developers, though restrictions remain in Makkah and Madinah.

Trade Diversification Imperative

Canada is aggressively pursuing trade agreements with partners like the UAE, China, and Qatar, aiming to double non-US exports by 2035. This strategy is driven by the need to mitigate risks from US protectionism and to attract foreign investment in sectors such as energy, AI, and infrastructure.

Export-Led Growth Under Global Pressures

Vietnam’s export-driven economy faces mounting US tariffs (up to 20%) and EU trade measures, threatening key market access. The government is actively diversifying export destinations to mitigate risks, but global trade tensions remain a significant operational challenge.

Suez Canal Disruptions and Recovery

The Gaza conflict and Red Sea security threats caused Egypt to lose $9 billion in Suez Canal revenue over two years, severely impacting global supply chains and Egypt’s foreign exchange. Gradual resumption of shipping is underway, but risks remain.

Deteriorating Investment Climate and Human Rights Concerns

Widespread repression, mass casualties, and international condemnation have further eroded Iran’s investment climate. Heightened scrutiny over human rights abuses and governance failures increases reputational and regulatory risks for foreign investors and partners.

Energy Transition and Power Security

South Africa’s move from chronic power shortages to improved energy stability—driven by Eskom reforms, renewables expansion, and regional cooperation—has reduced loadshedding, but challenges remain around grid modernization, cyber risks, and affordable electricity for industry.

Federal Reserve Policy and Political Pressures

The Federal Reserve has paused rate cuts, holding at 3.5-3.75%, amid robust GDP growth and persistent inflation. Political interference, including Supreme Court cases and leadership uncertainty, threatens Fed independence, influencing monetary policy outlook and global investor confidence.

Tightened Foreign Investment and Land Rules

Japan is intensifying scrutiny of large-scale land acquisitions and raising barriers for foreign business visas, requiring higher capital and stricter compliance. These changes aim to protect national interests but may deter smaller foreign investors and impact market entry strategies.

Technology Sector Volatility and AI Investment

Major US tech firms are ramping up AI investments, but market performance is diverging due to supply chain disruptions and tariff uncertainty. Long-term AI adoption promises sectoral transformation, yet near-term volatility affects global tech partnerships and investment strategies.

Concentration Risk in Semiconductors

Over 97% of high-end chips are still produced in Taiwan. US officials warn that any blockade or destruction of this capacity could trigger a global economic crisis, highlighting the urgent need for diversification and supply chain resilience.