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Mission Grey Daily Brief - June 24, 2024

Summary of the Global Situation for Businesses and Investors

The world is witnessing a complex interplay of events, from the ongoing Israel-Hamas conflict and its implications, to the rise of Afghanistan in cricket, and the impact of climate change on forest fires in Türkiye. Meanwhile, the political landscape is ever-shifting, with the US-Vietnam relations strengthening, and the UK facing the repercussions of Brexit.

Israel-Hamas Conflict and Iran's Response

The ongoing conflict between Israel and Hamas has resulted in thousands of deaths and widespread devastation in Gaza. While the US has denied claims of genocide, pro-Palestinian activists have criticized the media for downplaying the bloodshed. An offensive by Israel into Lebanon risks triggering an Iranian military response, as stated by a top US military leader. This complex situation has broader implications, with the Iran-backed Houthis targeting ships in the Red Sea and the Indian Ocean.

Risks and Opportunities

  • The conflict has the potential to escalate, leading to increased regional instability and impacting businesses operating in the region.
  • Businesses should closely monitor the situation and be prepared for potential disruptions to their operations and supply chains.
  • There is a risk of negative public perception and backlash for companies associated with either side of the conflict.
  • Opportunities may arise for companies providing reconstruction and humanitarian aid in the affected areas.

Afghanistan's Cricket Victory and its Implications

Afghanistan's victory over Australia in the Twenty20 World Cup has significant implications beyond the sporting realm. This win, despite the country facing sporting sanctions due to the Taliban's leadership, showcases Afghanistan's emergence as a force in world cricket. It also highlights the country's potential for growth and development in other sectors.

Risks and Opportunities

  • Afghanistan's cricket victory presents opportunities for businesses to explore previously untapped markets and invest in the country's economic development.
  • However, there are risks associated with the country's current leadership and human rights record, which businesses should carefully consider before engaging in any economic activities.
  • The victory also underscores the potential for positive change and growth in Afghanistan, which businesses can support and benefit from.

Forest Fires in Türkiye and Climate Change

Türkiye is experiencing a fivefold increase in forest fires compared to last year due to record-breaking temperatures. This situation has resulted in extensive damage, casualties, and agricultural losses. The former undersecretary of the Environment, Urbanization, and Climate Ministry emphasized that 95% of forest fires are human-caused and urged protective measures.

Risks and Opportunities

  • Businesses operating in or with connections to Türkiye should be aware of the potential impact of forest fires on their operations, supply chains, and local communities.
  • There may be opportunities for companies specializing in fire prevention, firefighting equipment, and disaster relief to provide their expertise and services.
  • The situation underscores the importance of addressing climate change and its impacts, presenting opportunities for businesses in renewable energy, sustainable technologies, and environmental initiatives.

US-Vietnam Relations Strengthening

A US envoy's visit to Hanoi has led to a strengthening of relations between the US and Vietnam, with the envoy stating that trust between the two countries is at an "all-time high." This development comes just days after a visit by Putin, indicating a strategic shift in Vietnam's foreign relations.

Risks and Opportunities

  • Businesses should be cautious about potential geopolitical tensions and their impact on operations in the region.
  • The strengthening of US-Vietnam relations presents opportunities for companies to explore new markets and expand their global presence.
  • Vietnam's shift in foreign relations may lead to changes in trade policies and economic opportunities for businesses.

Recommendations for Businesses and Investors

  • Closely monitor the evolving geopolitical landscape and be prepared for potential risks and disruptions.
  • Consider the potential impact of regional conflicts and natural disasters on your operations, supply chains, and local communities.
  • Stay informed about changing trade policies and economic opportunities, especially in emerging markets, to make strategic business decisions.
  • Prioritize sustainable and ethical practices to contribute to global efforts in addressing pressing issues such as climate change and human rights.

Further Reading:

A U.S. envoy visits Hanoi days after Putin, saying US-Vietnam trust is at 'all-time high' - Toronto Star

Activists protest outside CNN anchor Jake Tapper's home, hit his coverage of Israel-Hamas war - USA TODAY

Afghanistan trigger a cricket earthquake, put Australia’s cup campaign on the ropes - Sydney Morning Herald

An Israel offensive into Lebanon risks an Iranian military response, top U.S. military leader says - Toronto Star

An Israel offensive into Lebanon risks an Iranian military response, top US military leader says - Toronto Star

Brexit fall-out, finances and a unified Ireland dominate leaders' TV debate - Guernsey Press

Indonesia's Trade Minister Sends Off Steel Exports to Australia, Canada, and Puerto Rico - Tempo.co English

Iran-Backed Houthis Target 2 Ships In Red Sea, Indian Ocean - NDTV

June sees fivefold increase in forest fires in Türkiye - Hurriyet Daily News

Themes around the World:

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Political Continuity Amid Leadership Transition

Vietnam’s 14th Communist Party Congress in January 2026 will set leadership and policy direction through 2030. While continuity is expected, the party aims for 10% annual GDP growth, balancing reduced foreign dependence with high-tech FDI attraction. Centralized authority may enhance decisiveness but narrows internal checks, impacting business predictability.

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Western Sanctions Reshape Trade Flows

Sweeping US, EU, and UK sanctions have forced Russia to reroute trade toward China, India, and other 'friendly' nations, now accounting for 86% of Russian trade. This realignment disrupts global supply chains, complicates compliance, and increases operational risks for international businesses.

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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.

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Northern Powerhouse Rail Investment

The government has committed up to £45 billion for Northern Powerhouse Rail, aiming to transform connectivity between major cities. This long-term infrastructure project will boost regional growth, create jobs, and unlock new business opportunities, but faces delivery risks.

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Sovereign Wealth Fund and State Enterprise Reform

The Danantara sovereign wealth fund, managing $1 trillion in assets, is positioned to finance future industries and co-invest with global partners. Plans to rationalize state-owned enterprises from 1,044 to 300 aim to enhance efficiency and governance, signaling a more modern and open investment environment.

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Agricultural Sector Crisis and Policy Response

French agriculture faces crisis from low incomes, regulatory burdens, and disease outbreaks. The government announced €300 million in support, import suspensions, and stricter controls, but unrest persists, impacting supply chains and investment confidence in the sector.

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USMCA Uncertainty and Tariff Risks

Ongoing US-Canada trade tensions, including Supreme Court decisions and USMCA renegotiations, create volatility for Canadian exporters. Tariff threats on key sectors like furniture and lumber impact supply chains, investment planning, and cross-border business operations.

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Rising Franco-German Defense and Policy Tensions

France is increasingly uneasy about Germany’s €500 billion defense buildup and growing influence in European security and industrial policy. Disputes over joint defense projects and diverging strategic priorities could affect cross-border investments and the future of European industrial cooperation.

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Indigenous Inclusion and Project Legitimacy

Indigenous partnership is increasingly central to resource and infrastructure development. Legal challenges, demands for meaningful consent, and environmental stewardship shape project viability, requiring businesses to prioritize Indigenous engagement for operational certainty and social license.

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Political Transition and Governance Reform

The impeachment of President Yoon and election of Lee Jae Myung brought governance reforms, including corporate governance improvements and tax changes. These reforms aim to reduce the 'Korean discount,' boost investor confidence, and enhance South Korea’s business environment.

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Shifts in Global Capital Flows and FPI Behavior

US monetary policy, tariff uncertainty, and geopolitical risks have triggered large-scale foreign portfolio investor outflows from emerging markets, notably India. While US and European investors maintain selective exposure, volatility in currency and bond markets is prompting a reassessment of risk and asset allocation strategies.

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Energy Transition: Nuclear Expansion and Supply Constraints

France’s €52 billion nuclear program aims to secure energy independence amid global hardware shortages and high copper prices. However, supply chain bottlenecks, reliance on Asian imports, and grid fragmentation pose significant risks for industrial operations and long-term investment planning.

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IMF-Driven Privatisation and Reforms

Pakistan is selling state assets and implementing governance reforms to meet IMF bailout conditions. These measures aim to reduce fiscal deficits and attract investment, but also raise concerns about job losses, social impact, and national control over strategic sectors, affecting investment strategies and market entry.

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Strategic Defense Alliances and Regional Security

Turkey is negotiating a tripartite defense pact with Saudi Arabia and Pakistan, and is assuming a leading role in Black Sea naval security. These moves enhance Turkey’s geopolitical influence, but may introduce new risks and compliance considerations for international firms.

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Industrial Output Faces Prolonged Decline

German industrial production declined 1.2% in the first 11 months of 2025, marking a fourth consecutive annual drop. Key sectors like automotive and machinery remain below pre-pandemic levels, reflecting deep structural challenges and ongoing risks for exporters and global supply chains.

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Corporate Governance and ESG Reforms

Taiwan’s stock exchange launched the Power UpTW initiative, with nearly half of listed companies participating in governance and ESG improvements. Enhanced transparency and disclosure standards aim to boost investor confidence and international competitiveness.

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Monetary Policy Easing and Inflation

Turkey’s central bank continues a cautious monetary easing cycle, lowering rates to 37% as inflation falls to 30.9%. The bank targets 16% inflation by end-2026. Policy predictability and inflation volatility remain key concerns for investors and supply chain planners.

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Infrastructure Reform And Connectivity

Ongoing infrastructure reforms focus on improving cross-border connectivity and logistics, with regulatory updates in rail and transport. Enhanced infrastructure may support supply chain efficiency, but regulatory complexity and funding constraints could delay business benefits.

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Domestic Economic Imbalances

China’s 5% GDP growth in 2025 relied heavily on exports, masking persistent domestic challenges: weak consumption, a slumping property sector, and demographic decline. These imbalances threaten sustainable growth and complicate policy responses for global investors.

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Geopolitical Tensions Disrupt Trade

Escalating US–China and US–Venezuela tensions heighten global trade uncertainty, impacting Thai exports, energy prices, and supply chains. Businesses face increased logistics costs and market volatility, especially in energy-intensive and export-oriented sectors, requiring robust risk management and market diversification strategies.

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Infrastructure Reconstruction and Investment Challenges

Gaza’s reconstruction is estimated to require $50–70 billion, but funding pledges remain inadequate. The scale of destruction, combined with political and security risks, creates significant challenges for infrastructure, energy, and technology investors seeking stable returns in post-conflict environments.

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Technology Export Controls and Supply Chain Security

New US export controls and tariffs on advanced AI chips to China target national security risks and reduce reliance on foreign supply chains. These measures reshape the global tech sector, influence investment strategies, and may trigger further fragmentation of technology markets.

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Supply Chain Relocation and Resilience

Vietnam remains a top destination for supply chain relocation, with firms like Google shifting production from China. However, underdeveloped local supplier networks, logistics gaps, and regulatory bottlenecks present ongoing risks to supply chain resilience and operational efficiency for international manufacturers.

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Regional Security and Geopolitical Tensions

Iran’s weakened regional influence and ongoing US-Israel confrontation heighten geopolitical risks. The threat of military escalation, regime change scenarios, and proxy conflicts in neighboring countries increase uncertainty for international trade and investment strategies.

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Infrastructure and Logistics Bottlenecks

Despite reforms, South Africa’s infrastructure—particularly in electricity, rail, and ports—remains a constraint. Delays in logistics and persistent service failures disrupt supply chains, increase costs, and erode competitiveness, challenging companies reliant on efficient movement of goods.

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Ambitious Economic Reform and Growth Targets

Vietnam’s leadership, under To Lam, has set a highly ambitious target of over 10% annual GDP growth through 2030, aiming to transform the country into a high-middle income economy. Sweeping administrative reforms, private sector empowerment, and innovation are central, but success depends on overcoming structural bottlenecks and sustaining investor confidence.

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Regional Diplomacy and Trade Policy Uncertainty

Israel’s diplomatic maneuvering—balancing US, Egyptian, and broader regional interests—creates a fluid trade policy environment. Ongoing negotiations over border management, reconstruction, and security arrangements introduce unpredictability for cross-border trade, investment flows, and multinational business strategies.

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Declining Foreign Investment and Policy Uncertainty

Foreign direct investment dropped 82% year-on-year, reflecting high taxes, inconsistent regulation, and bureaucratic inefficiencies. The Special Investment Facilitation Council (SIFC) aims to streamline approvals, but investor confidence remains fragile, impacting long-term capital flows and supply chain decisions.

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Volatile Inflation and Interest Rate Outlook

Despite moderating inflation, robust employment and wage growth have increased expectations of Reserve Bank rate hikes in 2026. This environment creates uncertainty for borrowing costs, investment planning, and consumer spending, requiring businesses to closely monitor monetary policy developments.

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Regulatory Reforms and Business Environment

Ongoing economic reforms target improved investment climate, streamlined licensing, and expanded digital and physical infrastructure. The government is enhancing free zones, logistics corridors, and industrial clusters, notably in the Suez Canal Economic Zone, to boost exports and attract diversified FDI, especially in manufacturing and green energy.

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Tightening Export Controls and Tech Restrictions

Beijing is intensifying export controls on critical goods, including rare earths and dual-use technologies, to safeguard national security and leverage supply chain influence. These measures impact global technology access and increase compliance risks for international firms.

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Populism, Protectionism, and Social Strains

Rising energy costs, fragmented grids, and contentious trade policies are fueling protectionist sentiment and social unrest in France. These trends heighten regulatory unpredictability, complicate cross-border operations, and require careful stakeholder engagement for international investors and supply chain managers.

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China’s Beef Import Quotas Impact

China’s new safeguard measures on Brazilian beef, effective January 2026, introduce quotas and higher tariffs on excess volumes, potentially reducing Brazil’s beef exports to China by up to 6%. This will force Brazilian producers to adjust supply chains and diversify export markets, impacting agribusiness strategies.

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Canada-China Trade Normalization and Tariff Reset

Canada and China have reached a landmark agreement to reduce tariffs on electric vehicles and canola, unlocking nearly $3 billion in Canadian exports. This deal signals a thaw in bilateral relations, but risks U.S. retaliation and supply chain realignment, especially in autos and agriculture.

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Saudi-UAE Rivalry Disrupts Supply Chains

The intensifying Saudi-UAE competition in Yemen, especially over control of strategic ports and oil-rich regions, risks fragmenting regional alliances and disrupting Red Sea and Gulf supply chains. This rivalry could alter trade flows and increase operational risks for international businesses.

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Infrastructure Investment Pipeline Expansion

India’s government has launched a Rs 17 lakh crore PPP project pipeline with 852 projects, spanning roads, power, ports, and railways. This initiative provides medium-term investment visibility, boosts private sector participation, and underpins India’s long-term competitiveness in trade and logistics.