Mission Grey Daily Brief - July 23, 2024
Summary of the Global Situation for Businesses and Investors:
Global markets are experiencing heightened volatility as the US-China trade war escalates, with both countries imposing tariffs on each other's goods. The conflict has led to a slowdown in economic growth, particularly in Asia, and businesses are facing challenges in navigating the uncertain trade environment. Europe is struggling with an energy crisis as natural gas prices soar, causing concerns about the upcoming winter season. The situation has highlighted the vulnerability of European energy markets and the potential impact on industries and households. Meanwhile, the UK is facing a political crisis as the government collapses, triggering a snap election. Businesses are bracing for potential policy changes, and the outcome will have significant implications for the country's future relationship with the EU. In the Middle East, tensions flare as Iran's nuclear program advances, raising concerns about regional stability and the potential for military conflict.
US-China Trade War: Tariffs and Tensions
The ongoing trade war between the US and China continues to dominate the global economic landscape, with both countries imposing tariffs on billions of dollars' worth of goods. This has disrupted supply chains and impacted businesses worldwide, particularly those with significant exposure to either market. While the US targets Chinese technology and manufacturing sectors, China retaliates with tariffs on US agricultural products, impacting American farmers. Businesses are forced to reconsider their strategies, and some are looking to diversify their supply chains to mitigate risks. A prolonged trade war could lead to a further decoupling of the world's two largest economies, creating a challenging environment for companies operating in both markets.
European Energy Crisis: Soaring Gas Prices
Europe is in the grip of an energy crisis as natural gas prices soar to record highs. This crisis has multiple causes, including reduced Russian gas supplies, low gas storage levels following a cold winter, and increased global demand. The situation has highlighted Europe's overreliance on Russian gas and the vulnerability of energy markets to geopolitical tensions. Industries reliant on natural gas, such as chemicals and fertilizers, are facing production cuts and shutdowns. Households are also expected to feel the impact as energy bills rise. The crisis underscores the need for Europe to diversify its energy sources and accelerate the transition to renewable alternatives.
UK Political Turmoil: Government Collapse and Snap Election
The UK is facing a period of political uncertainty as the government has collapsed, triggering a snap election. This development has significant implications for businesses, particularly those operating in regulated industries or with government contracts. The outcome of the election will likely shape the future relationship between the UK and the EU, including trade agreements and regulatory alignment. A change in government could also bring about shifts in fiscal and monetary policies, impacting economic growth and business confidence. Businesses with operations or investments in the UK should closely monitor the political landscape and be prepared for potential policy changes.
Middle East Tensions: Iran's Nuclear Program
Tensions are rising in the Middle East as Iran makes significant advances in its nuclear program, raising concerns about regional stability and the potential for military conflict. Iran has been enriching uranium to levels beyond what is permitted under the 2015 nuclear deal, from which the US withdrew in 2018. The situation has implications for global oil supplies, as any disruption in the Middle East could impact prices. Businesses with operations or supply chains in the region should assess their exposure to geopolitical risks and consider contingency plans.
Recommendations for Businesses and Investors:
Risks:
- US-China Trade War: Continued escalation could lead to further supply chain disruptions and reduced market access, impacting businesses with exposure to both markets.
- European Energy Crisis: Soaring gas prices may result in production disruptions and higher costs for industries reliant on natural gas, affecting their competitiveness.
- UK Political Turmoil: Policy changes following the snap election could impact trade agreements, regulatory frameworks, and economic policies, creating uncertainty for businesses.
- Middle East Tensions: Advances in Iran's nuclear program raise the risk of military conflict, which could disrupt global oil supplies and impact energy prices.
Opportunities:
- Diversification: Businesses can explore opportunities to diversify their supply chains and markets to reduce reliance on US-China trade.
- Renewable Energy: The European energy crisis underscores the need for a transition to renewable alternatives, offering investment opportunities in green technologies and infrastructure.
- UK Policy Changes: A new government in the UK may bring favorable policy changes, particularly in industries regulated or supported by the state.
- Middle East Stability: Businesses can benefit from stable oil supplies and prices if tensions in the Middle East are managed through diplomacy and a revival of the Iran nuclear deal.
Further Reading:
Themes around the World:
Oil revenues squeeze and discounts
Russia’s oil-and-gas tax receipts fell to about 393 billion rubles in January, with Urals trading at steep discounts and buyers demanding wider risk premia. Falling proceeds drive tax hikes and borrowing, raising payment-risk, contract renegotiations, and counterparty resilience concerns for exporters and suppliers.
Carbon pricing and green finance
Cabinet approved carbon credits, allowances and RECs as TFEX derivatives reference assets, anticipating a Climate Change Act with mandatory caps and pricing. Firms face rising compliance expectations, new hedging tools, and stronger ESG disclosure demands across supply chains and financing.
AB Gümrük Birliği modernizasyonu
AB ve Türkiye, Gümrük Birliği’nin modernizasyonu için çalışmaları hızlandırma sinyali verdi; EIB’nin Türkiye’de operasyonlarına kademeli dönüşü de gündemde. Kapsamın hizmetler, tarım ve kamu alımlarına genişlemesi tedarik zinciri entegrasyonunu güçlendirebilir; takvim belirsiz.
Dollar hedging costs surge
Foreign investors are increasing USD hedge ratios, amplifying dollar swings even without mass Treasury selling. Higher FX-hedging costs reshape portfolio allocation, pricing of long-term supply contracts, and can reduce inward investment appetite while raising working-capital volatility for importers.
Maritime logistics and port resilience
With major ports like Kaohsiung exposed to coercion scenarios, businesses face higher lead-time variance, inventory buffers, and contingency routing needs. Rising regional military activity and inspections risk intermittent delays even without full conflict, pressuring just‑in‑time models.
Reconstruction, Seismic and Compliance Risk
Post‑earthquake reconstruction continues, with large public and PPP procurement and significant regulatory scrutiny. Companies face opportunities in construction materials, engineering and logistics, but must manage seismic-building codes, local permitting, anti-corruption controls and contractor capacity constraints in affected regions.
Digital infrastructure and data centers
A proposed 20-year tax holiday plus GST/input relief aims to attract foreign data-center and cloud investment, targeting fivefold capacity growth to 8GW by 2030. Multinationals face opportunities in AI/5G ecosystems alongside evolving localization, energy and permitting constraints.
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.
Immobilien-, Bau- und Projektpipeline-Risiko
Hohe Finanzierungskosten bremsen Bau und Real Estate: Hypothekenzinsen lagen Ende 2025 bei ca. 3,9% (10 Jahre), Neubaufinanzierungen schwächer. Der Bau-PMI fiel Januar 2026 auf 44,7. Auswirkungen: Standortverfügbarkeit, Werks-/Logistikflächenpreise, Lieferantenaufträge und Investitions-Timings.
Regional connectivity projects at risk
Strategic infrastructure tied to Iran, such as Chabahar/INSTC routes, faces uncertainty as partners reconsider funding under U.S. pressure and expiring waivers. This threatens diversification of Eurasian supply corridors, increasing reliance on other routes and reducing redundancy for time-sensitive cargo.
Workforce constraints and labour standards
Tight labour markets, wage pressures, and scrutiny of recruitment and labour practices increase compliance and cost risks. Manufacturers and infrastructure developers may face higher ESG due diligence expectations, contractor oversight needs, and potential reputational exposure in supply chains.
Trade gap and dollar-driven imbalances
A widening US trade deficit—near $1 trillion annually in recent data—reflects strong import demand and softer exports. Persistent imbalances amplify political pressure for protectionism, invite sectoral tariffs, and increase FX sensitivity for exporters, reshoring economics, and pricing strategies.
5G/6G and private networks
Nokia-led investment in 5G Advanced, edge automation and forthcoming 6G trials underpins private wireless deployments for factories, ports and training sites. International operators and vendors can partner, but must plan for interoperability, cybersecurity certification and long R&D-to-revenue cycles.
FX regime and liquidity risks
Despite stronger reserves, businesses still face exposure to FX volatility, repatriation timing, and episodic liquidity squeezes as reforms deepen. Pricing, hedging, and local sourcing strategies remain critical, especially for import-intensive sectors and foreign-funded projects.
Tariff volatility and trade blocs
Rapid, deal-linked tariff threats and selective rollbacks are making the U.S. a less predictable market-access environment, encouraging partners to deepen non‑U.S. trade blocs. Firms face higher landed costs, rerouted sourcing, and accelerated contract renegotiations.
Import quotas for fuels tighten
Indonesia’s import caps are affecting private retailers, with Shell reporting work with government on 2026 fuel import quotas amid station shortages. Coupled with policy to stop diesel import permits for private stations, firms face supply disruptions, higher working capital needs, and reliance on Pertamina.
Clean-tech investment uncertainty
Major industrial greenfield plans remain volatile as firms reassess EV and battery economics. Stellantis cancelled a subsidized battery plant (over €437m support, up to 2,000 jobs), echoing other paused megaprojects. Investors face policy, demand and permitting uncertainty across clean-tech.
Stablecoins and payments disintermediation
Rapid stablecoin growth threatens to siphon deposits from banks (estimates up to $500bn by 2028 in developed markets) and disrupt fee income. For corporates, faster settlement may help, but deposit outflows can weaken regional lenders’ credit provision and liquidity buffers.
EU CEPA nearing completion
IEU‑CEPA negotiations have entered legal scrubbing, with completion targeted May 2026 and implementation aimed for January 2027. Indonesia expects up to 98% tariff-line elimination (around 90% duty‑free both ways), boosting EU-linked manufacturing, services, and investment planning.
Shipbuilding and LNG carrier upcycle
Korean shipbuilders are in a profitability upswing with multi‑year backlogs (about $124bn) driven by LNG carriers and IMO emissions rules, while China closes the gap. Global buyers and suppliers should expect capacity constraints, price firmness, and technology-driven differentiation.
Port and rail congestion capacity limits
Chronic congestion risks at the Port of Vancouver and inland rail corridors continue to threaten inventory reliability and ocean freight dwell times. Capacity expansions (e.g., terminal upgrades and Roberts Bank proposals) are slow, so importers should diversify gateways and build buffer stock.
Regulação de dados e compliance LGPD
A Câmara aprovou MP que transforma a ANPD em agência reguladora, com carreira própria e maior capacidade de fiscalização. Isso tende a elevar enforcement, custos de conformidade e exigências contratuais, especialmente em cadeias com compartilhamento internacional de dados.
Hydrogen-for-heating strategic uncertainty
Germany’s hydrogen backbone and standards work can divert capital and workforce from near‑term electrification, creating uncertainty about future building-heat pathways. Businesses face technology‑mix risk across boilers, H₂-ready assets, and grid upgrades—affecting product roadmaps and infrastructure investment timing.
Sanctions enforcement hits shipping
The UK is tightening Russia-related controls, including planned maritime services restrictions affecting Russian LNG and stronger action against shadow-fleet tankers. Heightened interdiction and compliance scrutiny increase legal, insurance, and chartering risk for shipping, traders, and financiers touching high-risk cargoes.
Reopening travel, visa facilitation
Large rises in cross-border trips and wider visa-free/extended transit policies (including UK visa-free plans) improve commercial mobility and service trade. However, implementation details and reciprocity remain variable, requiring firms to plan for compliance, documentation, and policy reversals.
Semiconductor reshoring and export controls
Taiwan’s chip sector faces simultaneous pressures: US tariffs on certain advanced chips, tighter tech controls toward China, and major offshore fab investment. Firms must redesign compliance, IP protection, and capacity allocation while managing customer qualification and margin impacts.
USMCA review and North America
The approaching USMCA review is heightening risk for automotive, agriculture, and manufacturing flows across the US–Canada–Mexico corridor. Threatened tariffs and rules-of-origin pressures incentivize nearshoring but complicate cross-border planning, inventory placement, and long-term supplier commitments.
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.
Chabahar port and corridor uncertainty
India’s Chabahar operations face waiver expiry (April 26, 2026) and new U.S. tariff threats tied to Iran trade, prompting budget pullbacks and operational caution. Uncertainty undermines INSTC/overland connectivity plans, increasing transit risk for firms seeking Eurasia routes via Iran.
Semiconductor mission and tech supply chains
India is accelerating its semiconductor roadmap (multiple approved units, focus on OSAT and ecosystem build-out). This expands opportunities in equipment, materials, design, and datacenter hardware, but timelines, infrastructure reliability, and export-control alignment remain key risks.
China tech export-control tightening
Export controls on advanced semiconductors and AI are tightening, raising compliance risk and limiting China revenue. Nvidia’s H200 China sales face strict, non‑negotiable license terms and end‑use monitoring; Applied Materials agreed to a $252M penalty over alleged SMIC-linked exports, signaling tougher BIS enforcement.
Maquila/IMMEX bajo presión competitiva
El sector maquilador enfrenta menor competitividad y proyectos en pausa por la revisión del T‑MEC. Se reportan 672 programas IMMEX cancelados y casi 600.000 empleos perdidos; aranceles a insumos asiáticos (25–50%) y certificaciones lentas dificultan sustitución de importaciones.
Fiscal tightening and sovereign risk
France’s 2026 budget continues consolidation, shifting costs onto sub‑national governments (≈€2.3bn revenue impact in 2026) and sustaining scrutiny after prior sovereign downgrades. Higher funding costs can pressure public procurement, infrastructure timelines, and corporate financing conditions.
Patchwork U.S. AI and privacy regulation
State-led AI governance and privacy rules are expanding in 2026, adding transparency, bias testing, provenance, and reporting requirements. Multinationals face fragmented compliance across jurisdictions, higher litigation risk, and new constraints on cross-border data and HR automation.
Heizungsgesetz-Reform erhöht Regulierungsrisiko
Die angekündigte Überarbeitung des Gebäudeenergiegesetzes („Heizungsgesetz“) schafft kurzfristig Unsicherheit über zulässige Technologien, Nachrüstpflichten und Übergangsfristen. Das bremst Investitionsentscheidungen, verschiebt Aufträge und verändert Markteintrittsstrategien für ausländische Hersteller, EPCs und Finanzierer.
Digital regulation tightening for platforms
Australia’s under‑16 social media ban (fines up to A$49.5m) and broader eSafety scrutiny are forcing stronger age assurance, content controls and reporting. Multinationals face higher compliance costs, data-handling risk, and potential service changes affecting marketing, customer support and HR.