Mission Grey Daily Brief - July 05, 2024

Summary of the Global Situation for Businesses and Investors

The world is witnessing a confluence of critical events with far-reaching implications. From the ongoing war in Ukraine to the looming threat of famine in Sudan, the global landscape is fraught with challenges. In Europe, the UK's Labour Party is poised to secure a significant victory in the general election, marking a shift in the country's political landscape. Meanwhile, France is grappling with a contentious election campaign marred by assaults and verbal abuse of candidates. On the environmental front, Hurricane Beryl has wreaked havoc in the Caribbean, underscoring the urgent need to address climate change. Lastly, China's influence continues to grow, with its ties to Russia and increasing involvement in the Shanghai Cooperation Organization (SCO) raising concerns among global powers.

Labour's Landslide Win in the UK

The UK's Labour Party, led by Keir Starmer, is projected to secure a substantial majority in the general election, signaling a shift away from years of Conservative rule. This victory comes amidst economic woes, eroding trust in institutions, and a fraying social fabric. The Labour Party's pledges to revive the economy, address infrastructure issues, and tackle the energy crisis have resonated with voters, who are eager for change.

France's Contentious Election Campaign

In France, the legislative election campaign has been marred by assaults and verbal abuse of candidates, prompting some to withdraw from the race. Far-right leader Marine Le Pen's National Rally (RN) party remains a formidable force, with Le Pen asserting her party's ability to secure an absolute majority. Centrist forces, including President Emmanuel Macron, have withdrawn candidates to prevent a far-right landslide. This tumultuous election season underscores the political polarization and rising extremism in France.

Ukraine's Railway Expansion

Amid the ongoing war with Russia, Ukraine is expanding and restoring its railway network with the support of international funding. This expansion aims to bolster Ukraine's connections with Europe, reducing its historical reliance on Russia. However, Ukraine's rail infrastructure faces challenges due to gauge differences with neighboring countries, hindering seamless cross-border transit. Ukraine's efforts to integrate with the European rail network are significant for both military and economic reasons.

Hurricane Beryl's Devastation

Hurricane Beryl, an unusually strong storm fueled by climate change, has caused widespread devastation in the Caribbean, leaving people homeless and missing. The storm has underscored the urgent need for global climate action, especially as Small Island Developing States bear the brunt of its impacts. Countries in the Caribbean and Northwestern Caribbean Sea are still reeling from the storm's impacts, with Jamaica and the Cayman Islands experiencing power outages and infrastructure damage.

China's Growing Influence

China's influence continues to grow, with its ties to Russia and increasing involvement in the Shanghai Cooperation Organization (SCO) raising concerns among global powers. Finnish President Alexander Stubb asserted that China could end Russia's war in Ukraine with a single phone call, highlighting Russia's dependence on China. Meanwhile, China's President Xi Jinping and Russian President Vladimir Putin are expected to hold talks in Kazakhstan, signaling a deepening relationship. Additionally, China's Belt and Road Initiative and its growing influence in Central and Eastern Europe are causing concern among Western powers.

Recommendations for Businesses and Investors

UK Political Shift: The Labour Party's victory in the UK may bring about policy changes, particularly in economic and social welfare areas. Businesses should monitor these shifts and adapt their strategies accordingly.
French Political Turmoil: The contentious election campaign in France underscores the need for businesses to closely follow political developments. A potential far-right victory could have significant implications for France's relationship with the EU and its approach to immigration and trade policies.
Ukraine's Railway Expansion: Ukraine's expanding railway network presents opportunities for businesses to contribute to the country's infrastructure development and facilitate trade connections with Europe.
Caribbean Recovery: In the aftermath of Hurricane Beryl, there may be opportunities for businesses to engage in reconstruction and recovery efforts in the Caribbean, particularly in the tourism and renewable energy sectors.
China's Growing Influence: China's deepening ties with Russia and expanding global influence may have geopolitical implications. Businesses should monitor these developments and assess their exposure to potential economic and trade disruptions.

Themes around the World:

Logistics and rail capacity buildout

Saudi ports handled 8.3m containers in 2025 (+10.6% YoY), while Saudi Arabia Railways carried 30m tons of freight and 14m passengers in 2025, cutting 2m truck trips. Accelerating multimodal capacity supports supply-chain resilience and inland distribution competitiveness.

Energy Supply and Cost Pressures

Delays in domestic gas production and reliance on expensive LNG imports have increased energy costs for industry. Pending petroleum law reforms and the need for clean energy to support new sectors, like data centers, are critical for operational planning and cost management.

Cybersecurity Regulation and Critical Infrastructure Protection

Israel is advancing comprehensive cyber legislation, expanding reporting and compliance requirements for critical sectors. With the country among the most targeted globally, these measures aim to enhance national resilience and safeguard business operations, particularly in tech, energy, and logistics.

Tech Controls and China Decoupling

U.S.-China technology rivalry continues to constrain semiconductor and AI supply chains via export controls and licensing, while China accelerates substitution. Firms face dual-ecosystem risks, tighter compliance, potential reconfiguration of R&D and manufacturing footprints, and higher costs for advanced computing capacity.

Manufacturing Push Through Deregulation

India aims to triple exports to $1.3 trillion by 2035 by prioritizing manufacturing in 15 sectors and launching the National Manufacturing Mission. The focus is on regulatory simplification, building manufacturing hubs, and reducing red tape rather than heavy subsidies, to boost competitiveness and attract investment.

Rafah Crossing and Border Controls Impact Trade

The partial and conditional reopening of the Rafah crossing with Egypt, under strict Israeli oversight, restricts the flow of goods and people. These controls hinder humanitarian aid, economic recovery, and cross-border trade, directly affecting supply chain resilience and regional business operations.

Semiconductor controls and AI choke points

Tighter export controls, selective approvals, and new tariffs on advanced chips are reshaping global tech supply chains. Firms face compliance burdens, China retaliation risk, and higher hardware costs; U.S.-based capacity and trusted suppliers gain strategic priority.

Green Transition and Cybersecurity Risks

Rapid expansion of decentralized, internet-connected renewable energy infrastructure introduces significant cybersecurity vulnerabilities. Securing the grid now requires a unified public-private security framework to mitigate risks of data manipulation and widespread outages.

Infrastructure and Logistics Modernization

Investment in logistics and infrastructure is accelerating, with Mexico’s 3PL market projected to grow from $14.4 billion in 2024 to $26.8 billion by 2033. Nearshoring, e-commerce, and public works like the Tren Maya drive demand for advanced warehousing, cross-border transport, and digital supply chain solutions.

Currency Stability and Market Growth

The Brazilian real appreciated 11.19% in 2025, while the Ibovespa index rose 33.7%, marking its best performance since 2016. Stable currency and booming equities enhance Brazil’s attractiveness for portfolio investment and international business expansion.

Shift Toward High-Value Industries

Thailand is accelerating reforms to attract foreign direct investment in high-tech, green infrastructure, and wellness tourism, moving away from traditional manufacturing. This strategic pivot aims to boost long-term competitiveness amid declining FDI and rising regional competition, especially from Vietnam and Indonesia.

Massive Infrastructure Reconstruction Drive

Ukraine’s large-scale reconstruction, backed by EU and international finance, is creating significant business opportunities in transport, energy, and urban development. However, risks from ongoing conflict and corruption concerns complicate project execution and investment returns.

Semiconductor Reshoring and Tech Investment

A landmark US-Taiwan trade deal is driving $250 billion in Taiwanese investment into US semiconductor manufacturing, aiming to secure critical supply chains and reduce dependence on Asia. This reshoring effort is central to US industrial and national security strategies.

Escalating US-China Trade Tensions

The US has maintained high tariffs on Chinese goods, with rates reaching 47.5%, resulting in a 28% drop in US imports from China and a 38% fall in exports to China in 2025. This has forced global supply chains to adapt, with Southeast Asia gaining market share, and has increased costs and uncertainty for international businesses.

ESG Regulation and Compliance Shift

Brazil is implementing robust ESG regulations, including mandatory sustainability reporting by 2026 and credit restrictions for companies linked to illegal deforestation. These measures are reshaping corporate governance, access to finance, and export eligibility, especially for land-intensive sectors.

Rial collapse, high inflation

The rial’s rapid depreciation to around 1.5–1.6 million per USD and inflation near 50% are destabilizing pricing, wages, and import capacity. Multiple exchange rates and subsidy changes amplify settlement risk, impair demand forecasting, and complicate repatriation and local sourcing.

Massive Reconstruction and Investment Plans

Western allies, led by the EU and US, are finalizing a 10-year, $800 billion recovery plan for Ukraine, focusing on infrastructure, energy, and technology. The plan’s success depends on achieving peace and security guarantees, with private sector involvement critical for long-term economic recovery.

US-Taiwan Strategic Trade Integration

A new US-Taiwan trade agreement lowers tariffs to 15% and commits over $250 billion in bilateral investments, especially in semiconductors and AI. This deepens economic ties, boosts exports, and enhances Taiwan’s role in trusted supply chains.

Disrupted Trade and Supply Chains

Widespread unrest, sanctions, and payment uncertainties have nearly halted key imports and exports, such as Indian basmati rice. Delayed remittances, shipment risks, and suspended subsidized foreign exchange have led to significant supply chain disruptions and heightened counterparty risk.

EU Energy Ban Accelerates Market Shift

The EU will fully ban Russian LNG and pipeline gas imports by 2027, with oil phase-out planned. This accelerates Europe’s diversification, reshapes supply chains, and compels Russia to seek alternative buyers, affecting global energy pricing and business operations across sectors.

Supply Chain and Border Management Uncertainty

The reopening of the Rafah border crossing and ongoing controls highlight persistent uncertainty in supply chain logistics. Restrictions on goods and movement, coupled with complex oversight, continue to challenge humanitarian aid, trade, and operational planning for international businesses.

Domestic Growth Relies on Exports

China’s 5% GDP growth in 2025 was mainly export-driven, with weak domestic consumption and investment. Authorities aim to boost domestic demand and technological self-reliance, but future growth remains vulnerable to external trade pressures and global demand shifts.

EU Customs Union Modernization Stalemate

Efforts to modernize the EU-Turkey Customs Union remain stalled, despite strong business community support. The outdated framework limits market access and creates non-tariff barriers, constraining Turkey’s export growth and integration with European supply chains.

Shadow Fleet and Illicit Trade Networks

Russia’s use of a vast shadow fleet to circumvent sanctions enables continued oil exports but exposes international shipping, insurance, and logistics firms to enforcement actions and compliance risks. Recent Western crackdowns are increasing operational uncertainty for global maritime and trade actors.

Supply Chain Diversification and Resilience

US and Taiwanese efforts to co-locate semiconductor production and critical supply chains in the US and third countries aim to reduce reliance on China, enhance resilience, and manage geopolitical risk. This trend is shaping investment and operational strategies.

National Privatization Strategy Expands PPPs

The new National Privatization Strategy aims to sign over 220 public-private partnership contracts and mobilize $64 billion in private investment by 2030. This initiative opens infrastructure, health, education, and logistics to foreign investors, enhancing competitiveness and operational efficiency.

Disrupted Oil Exports and Geopolitical Risk

Despite sanctions, Iran remains a major oil exporter, primarily to China. However, unrest, U.S. military threats, and new tariffs have increased the risk of supply disruptions, impacting global energy prices and complicating long-term contracts and logistics for energy buyers.

Sanctions Enforcement Expands Globally

US sanctions enforcement has intensified, targeting entities and behaviors beyond traditional lists. Secondary sanctions, especially related to Iran and Russia, are increasingly used, raising compliance risks for multinationals and complicating cross-border transactions and supply chains.

Export target amid protectionism

Vietnam is targeting US$546–550bn exports in 2026 (+15–16% vs 2025’s record US$475bn), but faces rising protectionism, stricter standards, and dependence on foreign-invested manufacturing and imported inputs—raising compliance, sourcing, and margin risks for exporters.

US–Taiwan tech security partnerships

Deepening cooperation on AI, drones, critical minerals, and supply-chain security signals a shift toward ‘trusted networks’. Companies may gain market access and certification pathways, but face stricter due diligence on China exposure, data governance, and third-country joint projects.

EU partnership deepens market access

Vietnam–EU ties were upgraded to a comprehensive strategic partnership, reinforcing the EVFTA-driven trade surge (two-way trade about US$73.8bn in 2025) and opening new cooperation on infrastructure, cybersecurity, and supply-chain security—supporting diversification away from US/China shocks.

Critical Minerals and Geopolitical Competition

Indonesia’s dominance in nickel and tin places it at the center of US-China rivalry for critical minerals. While new trade agreements promise investment, weak governance and inconsistent downstream policies risk Indonesia becoming a raw material supplier rather than a value-added manufacturing hub.

US-China Decoupling and Supply Chain Realignment

US-China trade relations have deteriorated, with tariffs and technology restrictions prompting companies to diversify supply chains. China’s exports to the US dropped 20% in 2025, but rerouting through third countries maintains indirect flows, complicating decoupling efforts and global sourcing strategies.

Semiconductor Sector Faces US Pressure

The US is leveraging tariffs and investment incentives to push Korean semiconductor giants like Samsung and SK hynix to expand US-based production. This industrial policy shift could reshape global supply chains, affect Korea’s tech leadership, and increase operational costs for Korean firms.

Energy transition meets grid constraints

Renewables are growing rapidly, yet Brazil curtailed roughly 20% of wind/solar output in 2025 with estimated losses around BRL 6.5bn, reflecting grid bottlenecks. Investors must factor transmission availability, curtailment clauses and regulatory responses into projects and PPAs.

Monetary policy and FX volatility

Banxico signaled further rate cuts are possible if tax and tariff changes do not trigger second-round inflation. With the policy rate around 7% and inflation near 3.8% early 2026, financing costs may ease, but peso volatility can impact input pricing and hedging needs.