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Mission Grey Daily Brief - July 09, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains highly dynamic, with several key developments impacting the geopolitical and economic landscape. Here is a summary of the most significant events from the past 24 hours:

  • Russia-Ukraine Conflict: Russia launched a massive missile barrage targeting multiple cities in Ukraine, including Kyiv, killing at least 36 people and injuring many more. A children's hospital in Kyiv was among the buildings hit, sparking widespread condemnation and prompting Ukraine to call for more air defense systems from its allies.
  • **France Elections: France held pivotal runoff elections that could result in a historic far-right victory or a hung parliament. The outcome will have implications for the country's policies on Ukraine, global diplomacy, and economic stability.
  • China-Russia Relations: China's President Xi Jinping called for world powers to facilitate direct negotiations between Russia and Ukraine, while also announcing joint military exercises with Belarus, a close ally of Russia.
  • Nepal Landslides: Heavy rainfall triggered landslides and flash floods in Nepal, resulting in at least 11 deaths, with eight people still missing. The Koshi River in southeastern Nepal is flowing above the danger level, raising concerns about potential flooding in the region. Rescue and recovery operations are ongoing, with authorities utilizing heavy equipment to clear debris and reopen blocked roads. The situation remains dynamic, with more rainfall expected in the coming days, which could exacerbate the impact of the floods and potentially lead to further casualties and damage.

Russia-Ukraine Conflict

The conflict between Russia and Ukraine continues to escalate, with Russia launching a large-scale missile attack on multiple Ukrainian cities, including the capital, Kyiv. This attack comes just a day before the NATO summit in Washington, where leaders are expected to discuss further support for Ukraine. The barrage included over 40 missiles, with hypersonic Kinzhal missiles among them, and targeted residential areas, infrastructure, and a <co: 0,10,11,12,14,15,20,30,31,32,34,35,40,50,51,52,54,55>children's hospital in Kyiv.</co: 0,10,11,12,14,15,20,30,31,32,34,35,40,50,51


Further Reading:

'Massive' barrage of Russian missiles target Ukraine, killing 21 and striking children's hospital - ABC News

'Ultimately, US will abandon the Philippines as a broken tool' - Global Times

A Kenyan court says 2022 shooting death of a Pakistani journalist by police in Nairobi was unlawful - WRAL News

A Ukrainian drone triggers warehouse explosions in Russia as a war of attrition grinds on - The Associated Press

At least 14 people killed in Ukraine after oil truck collides with minibus - The Independent

Children's hospital in Kyiv hit by missiles as Russia unleashes deadly barrage across Ukraine, killing at least 29 - Sky News

Children's hospital in Kyiv hit by missiles as Russia unleashes deadly barrage across Ukraine, killing at least 31 - Sky News

Children's hospital is blown up as Putin launches 'genocidal' missile strikes on multiple Ukraine cities on ev - Daily Mail

China hosts Hungary leader and announces joint exercises with Belarus - Airforce Technology - Airforce Technology

Dozens are killed as Russia bombards Ukraine. Among the buildings hit was a Kyiv children's hospital - ABC News

Dozens killed in Russian missile strike on children's hospital in Kyiv - FRANCE 24 English

France is voting in key elections that could see a historic far-right win or a hung parliament - The Associated Press

From Soccer Players to World Leaders: Reactions to France's Election Result - TIME

From Soccer Players to World Leaders: Reactions to France’s Election Result - TIME

Heavy rain triggers landslides in Nepal, 11 killed, 8 missing - The Straits Times

Themes around the World:

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Sanctions Exposure via Russia Links

Turkey’s balanced stance toward Russia and deep energy/trade links create secondary-sanctions and compliance complexity for multinationals. Firms must strengthen counterparty screening, dual-use controls and trade-finance diligence, especially around sensitive goods, re-exports and shipping/insurance arrangements involving Russian entities.

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Port labor and automation tensions

East/Gulf Coast port labor negotiations and disputes over automation remain a recurring tail risk for U.S. logistics. Even with tentative deals, threats of slowdowns or strikes can disrupt ocean schedules, raise demurrage, and push costly rerouting toward West Coast or air freight.

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BOJ tightening and yen swings

Rising Japanese government bond yields and intervention speculation are increasing FX and funding volatility. Core inflation stayed above 2% for years and debt is about 230% of GDP, raising hedging costs, repatriation risk, and pricing uncertainty for exporters and importers.

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Cyber and physical security exposure

Critical infrastructure targeting increases cyber and sabotage risks for telecoms, utilities, ports and industrial firms. Businesses should expect greater downtime probability, stricter security protocols, and higher compliance costs for data, critical equipment, and dual-use supply chains.

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Secondary tariffs and sanctions extraterritoriality

Washington is expanding secondary measures, including tariffs on countries trading with Iran and pressure on partners over Russia-linked commerce. This raises third-country compliance burdens, increases tracing requirements across multi-tier supply chains, and elevates retaliation and WTO-dispute risks for multinationals.

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Fiscalización digital y aduanas

El SAT intensifica auditorías basadas en CFDI y cruces automatizados, priorizando “factureras”, subvaluación y comercio exterior. Se reporta enfoque en aduanas (27,1% de ingresos tributarios) y nuevas facultades/visitas rápidas, elevando riesgos de bloqueo operativo, devoluciones y multas.

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Foreign Investment Scrutiny Intensifies

Australian authorities are tightening scrutiny of foreign investment, especially in strategic sectors like rare earths. Recent government actions to force divestment of Chinese-linked stakes in Northern Minerals reflect heightened national interest concerns, affecting deal certainty for international investors.

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Korea–US investment implementation bottlenecks

Parliament is fast-tracking a special act to operationalize Korea’s $350bn strategic investment package, while ministries set interim project-review structures. Execution pace, project bankability, and conditionality debates affect inbound/outbound capital planning, M&A timing, and supplier localization decisions.

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Maritime and insurance risk premia

Geopolitical volatility continues to reshape Asia–Europe logistics. Even as Red Sea routes partially normalize, rate swings and capacity overhang drive volatile freight pricing. China exporters and importers should plan for sudden rerouting, longer lead times, and higher war-risk insurance.

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IMF program drives policy shocks

Upcoming IMF reviews under the $7bn EFF are shaping budgets, tariffs and tax measures, tightening compliance pressure. Policy reversals, new levies and subsidy cuts can rapidly change input costs, cash-flow planning, and market access conditions for foreign firms.

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Critical Infrastructure and Energy Upgrades

Taiwan is investing in power grid upgrades, renewable energy, and digital infrastructure to support its expanding high-tech and data center sectors. These initiatives are vital for business continuity, supply chain reliability, and long-term competitiveness.

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Giga-project recalibration and procurement risk

Vision 2030 mega-developments exceed $1 trillion planned value, but timelines and scope are being recalibrated as oil prices soften and execution scrutiny rises. About $115bn in contracts have been awarded since 2019, yet suppliers face more selective, longer procurement cycles.

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Rising funding costs, liquidity swings

Short-term liquidity tightened around Tet, pushing interbank rates sharply higher and prompting widespread deposit-rate hikes; Agribank lifted longer tenors up to 6%. Higher financing costs can squeeze working capital, pressure leveraged sectors, and raise hurdle rates for projects.

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Critical minerals export controls

China’s expanding controls on dual-use goods and critical minerals (rare earths, gallium) and licensing slowdowns—seen in Japan-related restrictions and buyers diversifying to Kazakhstan—create acute input risk for semiconductors, EVs, aerospace, and defense-linked manufacturing worldwide.

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Shifting Foreign Direct Investment Patterns

Foreign direct investment in the US reached $5.71 trillion by end-2024, but trends show growing scrutiny of inbound deals, especially in strategic sectors. Regulatory reviews and geopolitical considerations are influencing investment flows and partnership structures.

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US interim trade reset

A new US–India interim framework cuts peak US tariffs to ~18% on many Indian goods, with some lines moving to zero, while India lowers duties on US industrial and select farm products. Expect near-term export uplift but ongoing uncertainty around Section 232 outcomes.

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Tech controls and AI supply chains

Evolving U.S. export controls on advanced AI chips and tools create uncertainty for Thailand’s electronics exports, data-center investment and re-export trade through regional hubs. Multinationals should review end-use/end-user controls, supplier traceability, and technology localization plans.

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US reciprocal tariff deal pending

Indonesia and the US are preparing to sign an Agreement on Reciprocal Tariff (ART), with talks reportedly reducing a mooted 32% US tariff to ~19% and carving out key Indonesian exports. Commitments may include ~$15bn Indonesian purchases of US energy, reshaping trade flows.

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Tariff volatility reshapes trade flows

Ongoing on‑again, off‑again tariffs and court uncertainty (including possible Supreme Court review of IEEPA-based duties) are driving import pull‑forwards and forecast containerized import declines in early 2026, complicating pricing, customs planning, and supplier diversification decisions.

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High-tech FDI and semiconductors

FDI remains resilient and shifts toward higher-value electronics and semiconductors, with 2025 registered FDI at US$38.42bn and realized US$27.62bn; early-2026 approvals exceed US$1bn in key northern provinces. This supports supply-chain diversification but increases competition for talent and sites.

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Foreign Direct Investment Decline

UK foreign direct investment projects fell by 13% in 2024, reflecting investor caution amid regulatory uncertainty and economic headwinds. This trend affects capital inflows, job creation, and the UK's attractiveness as a business destination.

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Optics and photonics supply expansion

Nokia’s optical-network growth and new manufacturing investments support high-capacity connectivity crucial for cloud simulation and telepresence. This can reduce latency for cross-border services, yet photonics component bottlenecks and specialized materials sourcing remain supply-chain risks for integrators.

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US-Indonesia Trade Deal Transformation

A forthcoming US-Indonesia trade agreement is set to quadruple bilateral trade from $40 billion, lowering tariffs and expanding market access. The deal will reshape supply chains, boost exports, and incentivize foreign direct investment, especially in manufacturing and digital sectors.

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Energy security and LNG logistics

PGN began supplying LNG cargoes from Tangguh Papua to the FSRU Jawa Barat, supporting power and industrial demand with distribution capacity up to 100 MMSCFD. Greater LNG reliance improves near-term supply resilience, but exposes users to shipping, price-indexation, and infrastructure bottlenecks.

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External financing and conditionality

Ukraine’s budget and defense sustainability depend on large official flows, including an EU-agreed €90 billion loan and an IMF Extended Fund Facility. Disbursements carry procurement, governance, and reform conditions; delays or missed benchmarks can disrupt public payments and project pipelines.

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EU Trade Relations and GSP+ Extension

The EU’s extension of GSP+ status until 2027 secures duty-free access for Pakistani exports, especially textiles, contingent on continued progress in human rights and governance. This preferential access is vital for export-led growth and supply chain resilience to European markets.

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B40 biodiesel mandate impacts fuels

Indonesia will maintain the B40 palm-based biodiesel mandate through 2026 under PP No. 40/2025, after saving an estimated Rp720 trillion in FX and cutting ~228 million tons CO2 (2015–2025). Higher domestic palm demand can tighten CPO export availability and price volatility.

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Energy exports and LNG geopolitics

US LNG is central to allies’ energy security, but export policy and domestic political pressure can affect approvals, pricing, and availability. For industry, this shapes energy-intensive manufacturing siting, long-term contracts, and Europe-Asia competition for cargoes, with knock-on logistics and hedging needs.

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Lira Volatility and FX Liquidity

Structurally weak long-term capital inflows and limited buffers keep USD/TRY risk elevated, raising import costs and FX debt-service burdens. Market surveys still price ~51–52 USD/TRY horizons, implying ongoing hedging needs, tighter treasury controls, and higher working-capital requirements for import-dependent sectors.

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Sanctions expansion and enforcement risk

U.S. sanctions and enforcement are intensifying on Iran-linked networks, including “shadow fleet” logistics and digital-asset channels, increasing secondary-risk exposure for shippers, traders, insurers, and banks. Compliance costs rise, with higher disruption risk for Middle East supply routes.

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Electricity contracts underpin competitiveness

Battery makers and other electro-intensive industries are locking in long-term power contracts with EDF; Verkor signed a 12-year deal alongside its Bourbourg gigafactory. Secured low-carbon electricity is becoming a key determinant of cost, investment viability, and export pricing.

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Energy Costs and Industrial Competitiveness

Despite recent tariff reductions, Pakistan’s industrial energy costs remain 34% higher than regional peers, undermining export competitiveness and supply chain efficiency. High input costs, currency instability, and policy uncertainty continue to challenge manufacturing and investment strategies.

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US–Taiwan reciprocal trade pact

A newly signed U.S.–Taiwan trade agreement caps U.S. tariffs at 15% and exempts 2,072 product categories, cutting average tariffs to ~12.33%. Taiwan will liberalize most U.S. imports and commit large purchases (e.g., US$44.4B LNG/crude) affecting sourcing strategies.

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DHS funding instability and disruptions

Recurring DHS funding standoffs and partial shutdowns threaten operational continuity for TSA, FEMA reimbursements, Coast Guard readiness, and CISA cybersecurity deployments, while ICE enforcement remains funded. Businesses should anticipate travel friction, disaster-recovery payment delays, and security-service gaps.

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Oil exports shift toward Asia

Discounted Iranian crude continues flowing via opaque logistics and intermediaries, with China and others adjusting procurement amid wider sanctions on other producers. For energy, shipping, and trading firms, this sustains volume but raises legal exposure, documentation risk, and payment complexity.

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Energy roadmap: nuclear-led electrification

The long-delayed PPE energy plan will be issued by decree, aiming to lift electricity to 60% of energy use by 2030. It backs six new EPR reactors (eight optional) plus renewables, shaping power prices, grid investment, and industrial site decisions.