Mission Grey Daily Brief - July 24, 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 sides imposing tariffs and restrictions. 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, raising concerns about the region's economic outlook and potential industrial disruptions. Tensions between Russia and Finland are rising over Finland's potential NATO membership, causing businesses to reconsider their exposure to the region. Meanwhile, the UK is facing a political crisis, with implications for its economic relationship with the EU and the rest of the world.
US-China Trade War:
The ongoing trade war between the US and China continues to be the dominant factor influencing global markets. Both countries have implemented tariffs and restrictions on each other's goods, disrupting supply chains and causing a slowdown in economic growth. Businesses with exposure to either market are facing significant challenges and uncertainty. The conflict has particularly impacted the technology and manufacturing sectors, with companies forced to reconsider their supply chain strategies and mitigate the risk of further escalations.
Europe's Energy Crisis:
Soaring natural gas prices have pushed Europe into an energy crisis, with far-reaching implications for businesses and industries. High energy prices are already impacting production costs and profitability, particularly in energy-intensive sectors. There are concerns that some industries, such as chemicals and fertilizers, may be forced to curb production or even halt operations temporarily. The crisis also highlights Europe's overdependence on Russian gas supplies, raising geopolitical concerns and prompting discussions about diversifying energy sources and accelerating the transition to renewable alternatives.
Russia-Finland Tensions:
Finland's potential membership in NATO has led to rising tensions with Russia, causing businesses to reassess their presence and investments in the region. Russia has threatened to retaliate against Finland if it joins the alliance, raising the risk of economic sanctions and disruptions to trade. Businesses operating in Finland or with significant Finnish operations may face challenges, particularly in sectors such as energy, forestry, and manufacturing, which have strong trade ties with Russia. The situation underscores the vulnerability of companies with exposure to geopolitical risks in the region.
Political Crisis in the UK:
The UK is facing a political crisis following the sudden resignation of several key ministers, throwing the country into turmoil and impacting its economic outlook. There are concerns about the stability of the government and the potential for an early general election. This crisis comes at a critical time for the UK, as it is still navigating the economic fallout from Brexit and trying to establish new trade relationships. Businesses with operations or interests in the UK are facing increased uncertainty, and there may be implications for the country's attractiveness as an investment destination.
Recommendations for Businesses and Investors:
Risks:
- US-China Trade War: Continued escalation could lead to further supply chain disruptions and higher costs for businesses. Diversifying supply chains and mitigating over-reliance on either market is crucial.
- Europe's Energy Crisis: Soaring energy prices may impact production costs and profitability, particularly for energy-intensive industries. Businesses should review their energy usage and consider strategies to enhance energy efficiency and resilience.
- Russia-Finland Tensions: Potential economic sanctions and trade disruptions between Russia and Finland could impact businesses with exposure to the region. Review supply chains and consider alternative sources to mitigate risks.
- Political Crisis in the UK: Political instability and potential policy changes in the UK create an uncertain environment for businesses. Monitor the situation closely and be prepared to adapt to possible changes in trade relationships and regulations.
Opportunities:
- Diversification: The US-China trade war highlights the importance of supply chain diversification. Businesses can explore opportunities in other markets, such as Southeast Asia or Latin America, to mitigate risks and access new growth avenues.
- Renewable Energy Transition: Europe's energy crisis underscores the need for a faster transition to renewable energy sources. Businesses can invest in renewable energy solutions, energy efficiency technologies, and energy storage systems to capitalize on the growing demand.
- Alternative Trade Routes: Tensions between Russia and Finland may prompt businesses to explore alternative trade routes and markets. This could create opportunities for companies in the logistics and transportation industries, as well as those providing trade finance and supply chain solutions.
- UK Market Access: The political crisis in the UK may present opportunities for businesses to enter or expand their presence in the market, particularly if the country seeks to attract foreign investment to bolster its economy.
Further Reading:
Themes around the World:
Supply Chain Shifts and ‘China Plus One’
Vietnam benefits from supply chain diversification as firms relocate from China, boosting manufacturing and exports. However, dependence on Chinese inputs persists, and a potential US-China trade deal could reverse some gains, challenging Vietnam’s move up the value chain and long-term competitiveness.
Inflation Slowdown and Cost Pressures
Inflation in France slowed to 0.8% in December 2025, mainly due to falling energy prices. However, persistent price increases in services and food, combined with budget uncertainty, create mixed pressures for businesses and consumers, affecting investment and consumption.
Corruption And Governance Challenges
President Pezeshkian has pledged anti-corruption reforms, but rent-seeking, smuggling, and bribery remain entrenched. Lack of transparency and regulatory unpredictability undermine investor confidence and complicate compliance for multinational firms operating in Iran.
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.
Energy Transition and Biomass Expansion
Indonesia’s PLN EPI is scaling up biomass supply to reduce coal use in power plants, aiming for lower carbon emissions and sustainable energy. Strategic partnerships and regulatory compliance are central, impacting energy sector investments and ESG-focused supply chains.
Infrastructure and E-Mobility Expansion
Mexico is accelerating infrastructure investments in logistics, energy, and electric vehicle markets, supported by government incentives and foreign capital. Expansion of charging networks and data centers is transforming urban mobility and digital supply chains, but gaps remain in nationwide coverage.
Renewable Energy Transition Accelerates
Major infrastructure projects like EnergyConnect and policy grants are driving Australia’s shift toward renewables, aiming for 82% clean energy by 2030. Supply chain, labor, and regulatory challenges remain, but the sector offers significant opportunities for foreign investment.
Judicial and Institutional Reforms Impacting Governance
Ongoing institutional reforms, including changes to the judiciary, media regulation, and civil service, are reshaping Israel’s governance landscape. These measures, while aimed at political consolidation, raise concerns about democratic norms, regulatory predictability, and the rule of law, with direct implications for investor risk and business operations.
Regulatory Reforms to Attract Investment
The Korean government is streamlining regulations and enhancing incentives to attract foreign investment, particularly in advanced industries. These reforms aim to improve the business environment, foster innovation, and maintain Korea’s status as a preferred destination for international capital and technology partnerships.
Major Infrastructure and Capital Relocation Push
Significant investments are flowing into Indonesia’s new capital, IKN, with new projects in commercial, culinary, and office sectors. This development signals increased investor confidence and aims to establish IKN as a new economic growth hub by 2028, influencing long-term investment strategies.
USMCA Review and Trade Uncertainty
The 2026 USMCA review is creating significant uncertainty for North American supply chains, especially as US President Trump has called the deal 'irrelevant' and threatened not to renew it. This could disrupt tariff-free trade, impacting automotive, electronics, and agricultural sectors.
Capital Market Growth and ESG Regulation
Taiwan’s IPO market reached record highs in 2025, driven by semiconductor and AI sectors. New ESG and sustainability disclosure regulations are raising compliance standards, influencing investment decisions and corporate governance for international and domestic firms.
Geopolitical Role in Black Sea Security
Turkey is assuming a leadership role in Black Sea naval security missions amid the Russia-Ukraine conflict, enhancing regional maritime safety. This strategic position strengthens Turkey’s influence in NATO and impacts trade routes, logistics, and risk assessments for international operators.
Fossil Fuel Expansion And Energy Policy
The Trump administration’s aggressive push for fossil fuels, including efforts to control Venezuela’s oil reserves and rollback of environmental regulations, signals a durable tilt against clean energy. This shift may hinder the US energy transition and cede global clean-tech leadership to China.
Migration Surges and Border Dynamics
Political turmoil in Venezuela and regional instability are driving increased migration flows through Mexico. This strains border infrastructure, affects labor availability, and complicates regulatory compliance for businesses reliant on cross-border movement of goods and people.
CUSMA Review and Tariff Uncertainty
The upcoming 2026 review of the US-Mexico-Canada Agreement (CUSMA) and ongoing U.S. tariff threats create significant uncertainty for Canadian trade. Tariff volatility and annual reviews could reshape supply chains, investment decisions, and export strategies for Canadian businesses.
Startup Ecosystem and Venture Investment Surge
South Korea’s government-led support for startups, highlighted at CES 2026, is fostering innovation in AI, deep-tech, and mobility. Seoul’s global ranking and record FDI inflows signal robust opportunities for venture capital, partnerships, and technology-driven business models.
AI Disruption and Labor Market Shifts
Rapid adoption of artificial intelligence is transforming US business operations, driving productivity but also causing job displacement and sluggish hiring. Firms are reassessing workforce strategies, with significant implications for employment, wage growth, and the structure of supply chains.
Geopolitical Realignment and Indo-German Partnership
Germany is deepening its strategic partnership with India, signing 19 agreements on defense, technology, critical minerals, and green energy. This realignment aims to reduce reliance on China and Russia, enhance supply chain resilience, and position Germany as a key player in the Indo-Pacific region.
Regulatory Tightening in Cross-Border E-Commerce
Turkey abolished the simplified customs declaration for goods under €30, effective February 2026. All e-commerce imports now face standard procedures, increasing compliance costs and scrutiny for international platforms, with exceptions for medicines and supplements.
Policy Focus on High-Tech and Green Industries
China’s government is prioritizing policy support and stimulus for high-tech, green development, and services to sustain growth. This includes targeted measures for AI, advanced manufacturing, and clean energy, shaping the competitive landscape for both domestic and foreign businesses in these sectors.
CPTPP Accession and Trade Policy Shifts
South Korea is actively pursuing membership in the CPTPP to diversify trade and reduce reliance on China. Progress is hindered by Japan’s conditions, such as easing seafood import bans, reflecting the complex interplay of trade, public sentiment, and regional politics.
AI and Technology-Driven Competitiveness
Rapid advances in AI and digitalization are boosting China’s productivity and global influence. The government’s support for tech IPOs and AI adoption is reshaping value chains, but also intensifies competition and export controls, impacting cross-border technology flows and business strategies.
Record Mexico-US Trade Surplus
Mexico’s exports to the US reached a record $48.5 billion in October 2025, with a 6.7% annual increase and a trade surplus of $18.9 billion. This underscores Mexico’s strategic role in US supply chains, but exposes it to US tariff and regulatory risks amid tense bilateral relations.
Foreign Investment Scrutiny and Regulatory Tightening
The US has expanded foreign investment screening, including new disclosure requirements for foreign private issuers and ongoing CFIUS reviews. These measures increase compliance burdens for cross-border deals, particularly in sensitive sectors, and reflect a broader trend toward national security-driven investment policy.
Currency Volatility and Economic Disconnect
The South African rand has shown strength against the US dollar, driven by global liquidity rather than domestic fundamentals. This disconnect, coupled with weak manufacturing and low GDP growth, creates uncertainty for investors and complicates hedging and pricing strategies for international trade.
Inflation Moderation and Currency Stability
Annual inflation fell to 10.3% in December 2025 from 23.4% a year earlier, mainly due to lower food prices. However, non-food inflation remains high, and the Egyptian pound is under pressure from debt and import needs, affecting consumer demand and business costs.
Labour Code Overhaul Modernizes Workforce
Four new Labour Codes implemented in late 2025 streamline 29 laws, promote gender equality, and expand social security coverage to 64%. Job-linked incentives and digital reforms support workforce formalization, ease compliance, and boost employment—critical for multinational operations and supply chain resilience.
Comprehensive Reform Momentum Accelerates
India's 2025-26 reform wave—GST 2.0, new Income Tax Act, labour codes, FDI liberalization, and legal modernization—has improved compliance, reduced business costs, and boosted investor confidence, creating a more predictable, competitive, and growth-oriented environment for international businesses.
Geopolitical Risks in East Asia
Rising military tensions over Taiwan and the Senkaku Islands, with Chinese naval activity and Japanese security commitments, increase the risk of regional conflict. This instability directly affects trade, investment flows, and the strategic calculus of multinational firms operating in Asia.
AGOA Renewal and US Trade Relations
The three-year extension of the US Africa Growth and Opportunity Act (AGOA) provides crucial duty-free access for South African exports, supporting jobs and investment. However, eligibility reviews and strained US relations introduce uncertainty for long-term trade and supply chain planning.
Industrial Investment Hurdles Persist
Regulatory delays in spatial planning and infrastructure bottlenecks continue to impede industrial zone development. Despite increased foreign investment, unresolved issues in permitting, utilities, and logistics pose risks to manufacturing and supply chain expansion.
Infrastructure Safety and Operational Risks
Recent fatal crane accidents in major infrastructure projects highlight persistent safety and regulatory enforcement issues. Such incidents can delay project delivery, raise insurance and compliance costs, and affect Thailand’s reputation as a reliable investment destination.
MSCI Developed Market Index Inclusion
The government’s roadmap for MSCI developed market index inclusion seeks to boost foreign investment and stock market liquidity. Reforms in currency convertibility and market access could significantly enhance Korea’s attractiveness for global investors and portfolio managers.
Japan’s Strategic Rare Earth Mining Push
Japan has launched the world’s first deep-sea rare earth mining trial near Minamitori Island, aiming to reduce dependence on China. Success could transform Japan into a key supplier, but technical, environmental, and cost hurdles remain, with full-scale operations targeted for 2027.
Foreign Investment Climate Deteriorates
Sanctions, currency instability, and political unrest have sharply reduced foreign direct investment. The environment is marked by opaque regulations, high corruption, and unpredictable policy shifts, deterring new entrants and expansion.