Mission Grey Daily Brief - June 28, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains complex, with the war in Ukraine continuing to rage and causing significant disruptions. The conflict has led to increased cooperation between Russia, China, North Korea, and Iran, raising concerns about global security. Meanwhile, the Communist Party in China faces questions about its ability to address the country's economic challenges. In the UK, a betting scandal involving members of the Conservative Party and Prime Minister Rishi Sunak's security detail has emerged, while in El Salvador, President Nayib Bukele has ordered the mass firing of 300 employees from the Culture Ministry. Lastly, international experts warn of a growing famine crisis in Sudan, with 755,000 people at risk in the coming months.
Ukraine-Russia War
The war in Ukraine continues to rage, with Russia targeting Ukraine's energy infrastructure, causing chronic power cuts and aiming to make cities unlivable. This systematic destruction is considered a war crime under international law, and it has already wiped out 50% of Ukraine's electricity-generating capacity. The conflict has also resulted in the world's largest displacement crisis, with over 11 million people forced to flee their homes. The war has now been ongoing for almost two and a half years, and Ukraine is facing significant challenges in terms of mobilization and government fatigue.
Growing Cooperation Between Russia, China, North Korea, and Iran
The US has flagged a growing threat to global security as Russia deepens its cooperation with China, North Korea, and Iran. This quasi-alliance now covers weapons sales, energy, and finance, with Russia seeking assistance for its war in Ukraine. The four countries are also increasing their space collaboration, with Russia launching an Iranian satellite and plans for a Russo-Chinese lunar nuclear power plant. Additionally, Russia and North Korea have revived a mutual defense agreement, with both nations pledging military assistance to each other in the event of war. This growing partnership adds complexity to the already contested space domain and has raised concerns among US officials.
China's Communist Party Faces Challenges
With China's economy facing vulnerabilities, investors, analysts, and business leaders are questioning whether the Communist Party is willing and able to design and execute an effective response. The upcoming meeting of the party's Central Committee on July 15 will be an opportunity for China's leaders to address these concerns. However, it seems more likely that the meeting will highlight the gap between the party's rhetoric and its actions.
UK Betting Scandal
In the UK, a betting scandal has emerged, involving members of the Conservative Party and Prime Minister Rishi Sunak's security detail. Up to 15 Conservative Party members are being investigated by the Gambling Commission for allegedly using insider information to place bets on the surprise election date announced by Sunak. This scandal has led to the withdrawal of support for two MPs and the suspension of several individuals, including a police officer assigned as a bodyguard to the Prime Minister.
El Salvador's Culture Ministry Firings
In El Salvador, President Nayib Bukele has ordered the mass firing of 300 employees from the Culture Ministry, stating that they were <co: 13,33,5
Further Reading:
A clear-eyed account of Ukraine under siege - The Economist
A pivotal moment for China's Communist Party - The Economist
A space quad: Russia, China, North Korea and Iran - Asia Times
Breaking Down the U.K. Election Betting Scandal - TIME
El Salvador Plans Mass Firing of Culture Ministry Employees - U.S. News & World Report
Experts warn that 755000 people at risk of famine in the coming months in war-torn Sudan - KSTP
Themes around the World:
Climate Plan Spurs Regulatory Pressure
Berlin’s 67-measure climate program commits about €8 billion to wind, electric mobility, charging, and heating networks, targeting an extra 27 million tonnes of CO2 cuts by 2030. Yet criticism over insufficient ambition signals continuing policy revisions, compliance pressure, and litigation risk for businesses.
Critical Minerals Geopolitics Intensifies
Ukraine’s minerals are gaining strategic weight in reconstruction and foreign investment, but occupation risks are rising. Russia is exploiting deposits in seized territories, while Kyiv is channeling investor interest into minerals, gas, and oil projects, increasing competition, political risk, and due-diligence complexity.
Ports Gain From Rerouting
Shipping disruptions in the Gulf are diverting cargo toward Pakistani ports, boosting transhipment at Gwadar, Karachi and Port Qasim. This creates near-term logistics opportunities, but long-term gains depend on stronger security, customs efficiency, storage capacity and digital infrastructure.
Red Sea Energy Bypass
Saudi Arabia’s East-West pipeline and Yanbu exports have become critical energy contingency assets. Pipeline throughput reached 7 million barrels per day, while Yanbu crude loadings approached 5 million, supporting exports but exposing investors to congestion, infrastructure security, and Red Sea transit risks.
Antitrust Pressure Targets Big Tech
US regulators and lawmakers are intensifying antitrust pressure on dominant platforms, including Meta and self-preferencing legislation aimed at Amazon and Apple. This could alter digital market access, platform fees, M&A assumptions, and data strategies for internationally exposed businesses.
High interest and inflation
The Selic was cut only marginally to 14.75%, while 2026 inflation expectations rose to 4.31% amid oil-price shocks. Elevated real rates support the currency but restrain credit, dampen domestic demand, and increase capital costs for expansion, procurement, and working capital.
Semiconductor Capacity Rebuilding
State-backed chip investment is accelerating, with Rapidus, TSMC’s Kumamoto operations and Micron expansion reinforcing Japan’s role in strategic technology supply chains. Equipment sales reached ¥423.13 billion in February, while fiscal 2026 sector sales are projected to rise 12%.
Supply Chain Cost Pressures
March PMI data showed UK business growth slowing to 51.0 from 53.7, while manufacturers’ input-cost pressures rose at the fastest pace since 1992. Fuel, freight, and energy-intensive materials are driving renewed supply-chain stress, forcing inventory, logistics, and procurement adjustments across sectors.
Food Security and Input Pressures
Authorities target 5 million tonnes of local wheat procurement while maintaining roughly six months of strategic reserves. However, fertiliser, fuel, and transport costs are rising sharply, increasing agribusiness input risks and potentially feeding broader food inflation, subsidy pressure, and consumer demand weakness.
Ukraine Strikes Disrupt Exports
Ukrainian drone attacks on ports, refineries, and pipelines are materially disrupting Russian energy logistics. Reports indicate around 40% of crude export capacity was temporarily affected, increasing force majeure risk, rerouting costs, and uncertainty for buyers, shippers, and insurers.
Energy Policy and Regulatory Barriers
Mexico’s energy framework remains a major investment constraint. The USTR says policies favor CFE and Pemex, permit delays persist, fuel rules are tightening, and Pemex still owes U.S. suppliers more than $2.5 billion, undermining operating certainty.
Energy Shock Raises Operating Costs
Conflict-linked oil disruptions and higher fuel prices are adding cost pressure across US transport, manufacturing, logistics, and chemicals. The resulting inflation risk also complicates monetary policy, forcing firms to reassess freight budgets, inventory strategies, and margin protection in North American operations.
Emergency Liquidity and Gold Measures
Authorities are using exceptional tools to stabilize markets, including $10 billion in FX swap auctions, gold-for-FX swaps and large reserve mobilization. Gold reserves were around $135 billion, but extensive use signals elevated stress in Turkey’s external financing position.
Agriculture And Land Constraints
Agribusiness remains export-critical but operates under mined land, energy shortages and logistics pressure. Roughly 137,000 square kilometers remain mined, while producers face higher processing and transport costs, even as planting stays near 16.6 million hectares and seed exports recover.
Non-oil economy loses momentum
Saudi Arabia’s non-oil PMI fell to 48.8 in March from 56.1 in February, the first contraction since 2020. New orders dropped to 45.2, export demand saw its steepest fall in almost six years, and project delays increased.
Won Volatility And Capital Outflows
The won averaged 1,486.64 per dollar in March, with record daily spot turnover of $13.92 billion and large intraday swings. Foreign equity selling and geopolitical stress are increasing hedging costs, earnings uncertainty, and financing risk for importers, exporters, and portfolio investors.
Fuel Subsidy Reforms Raise Costs
Egypt raised domestic fuel prices by 14% to 30% in March, including diesel, gasoline, and cooking gas. These reforms support fiscal consolidation but materially increase freight, manufacturing, and distribution expenses, with likely second-round inflation effects across supply chains and retail markets.
Energy Import Shock Exposure
Japan remains highly exposed to imported energy disruption as Middle East conflict lifts oil and LNG prices. About 6% of LNG imports transit Hormuz, and emergency measures aim to save 500,000 tons, raising costs for manufacturers, transport, and utilities.
Nickel Input Costs Rising
Nickel smelters are facing tighter ore quotas, a planned higher mineral benchmark price, and sulfur cost inflation. Industry says sulfur now represents 30-35% of HPAL operating costs, up from roughly 25%, squeezing battery-material margins and raising execution risk.
Fuel Market Intervention Risks
Moscow expanded its gasoline export ban to producers until July 31 to stabilize domestic supply amid refinery disruptions and seasonal demand. Such interventions can abruptly redirect volumes, tighten regional product markets, and create contract execution risks for fuel traders, transport operators, and industrial users.
China Intensifies Tech Poaching
Taipei says Beijing is targeting Taiwan’s chip and AI sectors through talent poaching, technology theft, and controlled-goods procurement. For multinationals, this heightens intellectual property, compliance, insider-risk, and partner-screening requirements across semiconductor, advanced manufacturing, and research ecosystems.
Tariff Volatility Reshapes Planning
Frequent shifts in U.S. tariff policy remain the most immediate business risk, with rates reportedly changed more than 50 times in a year. Legal reversals, fresh Section 232 actions, and temporary global tariffs are disrupting sourcing, pricing, contracts, and investment decisions.
Investment Incentives And FDI Shift
Taiwan remains attractive for advanced manufacturing and technology investors through tax credits, science park incentives and project support. Inbound FDI rose 44% to US$11.39 billion, while investment patterns are shifting away from China toward the United States and other partners.
Exports Strong, Outlook Fragile
February exports rose 9.9% year on year to US$29.44 billion, with US shipments up 40.5%, but imports jumped 31.8% to US$32.27 billion. Authorities now see 2026 export growth between minus 3% and plus 1.1% amid tariffs and logistics risks.
Geopolitical Passage Bargaining
Safe passage is increasingly tied to bilateral negotiation rather than predictable commercial norms. Countries including India, Thailand, and others have reportedly sought arrangements with Tehran, meaning trade access now depends more on diplomatic positioning, increasing uncertainty for neutral firms and investors.
Border Trade and Informal Channels Expand
Neighboring states are easing land-trade rules with Iran, including new customs stations and temporary removal of letters-of-credit requirements. This supports essential-goods flows despite inflation and shortages, but also heightens exposure to smuggling, weak documentation, sanctions scrutiny, and uneven regulatory enforcement.
USMCA Review and Trade Uncertainty
Mexico’s July 1 USMCA review is the dominant external risk for exporters and investors. With annual U.S.-Mexico trade above $834 billion and 80-82% of Mexican exports going north, possible changes to rules of origin, tariffs, energy and Chinese-content restrictions could reshape market access and capital allocation.
Highway Insecurity Disrupts Logistics
Cargo theft, extortion and transport protests are disrupting freight corridors across Mexico. Officially, 6,263 cargo robbery investigations were opened in 2025, while industry estimates exceed 16,000 incidents annually, raising insurance costs, transit delays, spoilage risks and cross-border supply chain vulnerability.
Inflation and Tight Monetary Policy
Annual inflation stood at 31.5% in February, with 12-month household expectations at 49.89%. The central bank has paused easing, kept the policy rate at 37%, and lifted overnight funding near 40%, raising borrowing costs and squeezing domestic demand.
Fiscal Strain Lifts Market Risk
US public debt near $39 trillion, annual interest costs around $1 trillion, and possible war spending and tariff refunds are intensifying fiscal concerns. A wider deficit could push yields higher, weaken bond demand, and increase volatility in funding markets central to global business finance.
Gaza Ceasefire Fragility Persists
The Gaza ceasefire remains unstable, with more than 700 Palestinians reportedly killed since October and repeated implementation disputes over withdrawals, crossings, and disarmament. Businesses face elevated operational uncertainty from renewed escalation risks, humanitarian restrictions, and shifting border-access conditions.
Infrastructure Delays Affect Logistics
Thailand’s 3-Airport High-Speed Rail project still awaits contract amendments, with July 2026 set as a critical deadline. Continued delays risk slowing logistics modernization, raising execution uncertainty for connected industrial zones and limiting long-term efficiency gains for transport-reliant investors and suppliers.
Sanctions Policy Clouds Energy Flows
Washington’s temporary easing of some Russian oil restrictions, now under political challenge, highlights sanctions unpredictability in energy markets. For importers, traders and refiners, sudden changes in U.S. enforcement can alter crude availability, pricing, shipping routes and compliance risks.
Automotive Transition Competitiveness
France’s Court of Auditors says €18 billion in auto support since 2018 failed to halt a 59% production decline since 2000 and a €22.5 billion trade deficit in 2024. EV policy recalibration will affect suppliers, OEM investment, and market-entry strategies.
Logistics Corridors Expand Westbound
New proposals linking Cai Mep–Thi Vai and Portland, plus port upgrades in Hai Phong, Da Nang, and Ho Chi Minh City, could strengthen trans-Pacific shipping resilience. For exporters, improved direct routes may reduce transit times, diversify gateways, and support North American market access.
Defense Industry Investment Surge
Ukraine is becoming a major defense-industrial platform with expanding joint production abroad and at home. Recent deals include Germany’s €4 billion package, 5,000 AI-enabled drones, and several hundred Patriot missiles, creating opportunities in manufacturing, technology partnerships, and dual-use supply chains.