🎁 Think inside the box

What’s going on here?

Data out on Thursday showed that China’s exports dropped again in August.

What does this mean?

China’s trade data might not seem like something worth shouting about: after all, the nation’s still navigating rough waters, with exports declining for the fourth straight month. But delve a little deeper, and things brighten up. The 8.8% drop in exports year-on-year in dollar terms wasn’t as dire as economists expected, especially when compared to July’s steep 14.5% fall. And there’s more good news. Other Asian nations, like South Korea, are also showing signs of recovery in their trade. That trend suggests that global demand might be on the upswing, and that the massive inventory stockpiles accumulated during the pandemic are finally dwindling. Plus, better-than-anticipated import figures hint at a potential turnaround in China’s lagging domestic demand – so while it’s still early days, these indicators hold out hope for a big part of the Chinese economy.

Why should I care?

Zooming in: Trading insults.

While trade with the US seemed to perk up last month, the underlying tensions with China remain palpable. And even though both nations have tried to rekindle dialogue, real-world progress seems elusive. So, in the latest counter to US-led chip controls, China is mulling expanding a ban on iPhones in state companies and government-backed agencies. That could severely dent Apple’s prospects – especially when you consider that a fifth of its revenue springs from China, the world’s biggest smartphone market. Unsurprisingly, then, Apple shares wobbled when the news broke.

The bigger picture: Stuck in second.

While there’s optimism that fresh steps by the government might help China rebound soon, it’s not all rosy. Some economists warn that China’s current dip could delay its quest to outpace the US economy. In fact, Bloomberg Economics predicts that China might only edge ahead by the mid-2040s – and even then, that lead could be short-lived.

What’s going on here?

Two of the world’s biggest packaging companies are weighing up a merger.

What does this mean?

Cardboard boxes might not be exciting, but packaging is actually big business. After all, almost everything we buy, from e-commerce products to our favorite beers, comes bundled in some form of package or box. And now US-based WestRock and Ireland’s Smurfit Kappa, titans in the space, are discussing a potential union – with a combined value of $20 billion. That heft’s not the only boon: WestRock reckons the deal could lead to serious savings, pocketing over $400 million in the first year alone. Little wonder, then, that the firms are excited about the prospect, which would bring their 500-plus operations together to form the world’s premier packaging provider.

Why should I care?

For markets: Boxing clever.

Each firm currently commands about 20% of the market share for one hot commodity: the standard brown boxes used by retailers and e-commerce platforms. So when these giants talk of merging, it’s bound to send ripples across the industry – if competition regulators don’t object, that is. And this could be a well-timed move: for one, analysts predict a resurgence in demand next year. And for another, the ongoing global shift from plastic to more sustainable paper-based packaging – a niche these companies excel in – means they’re set for a sizable boost.

The bigger picture: London’s burning.

If the deal does go ahead, it would spell more woe for the UK stock market. The tie-up’s set to see Smurfit Kappa cancel its premium listing on the LSE, and it wouldn’t be the first to bid Britain bye-bye: just this month CRH is due to switch to the US from London, and mining giant BHP skedaddled last year too. It’s not hard to see why: the British economy is flailing right now, while valuations on the UK stock market aren’t exactly sitting pretty.