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Cross-border trade competition and international stock return comovement

Author

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  • Pyun, Sungjune
  • Sulaeman, Johan

Abstract

Stock markets of countries that actively engage in international trade may move together more or less depending on their international trade linkages. This paper demonstrates that the stock markets of two countries are less likely to move together if these countries compete intensely in their export product markets. This is in contrast to the higher stock co-movement of countries that share similar exposures to common demand shocks. The empirical patterns imply that stronger cross-border trade linkages may not result in higher cross-market return correlations.

Suggested Citation

  • Pyun, Sungjune & Sulaeman, Johan, 2026. "Cross-border trade competition and international stock return comovement," Journal of International Economics, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:inecon:v:161:y:2026:i:c:s002219962500131x
    DOI: 10.1016/j.jinteco.2025.104174
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    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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