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Global stocks may be rebounding on Tuesday following Monday’s big selloff, but is global trade still lingering as a top concern among investors? It sure looks that way.

Economists at National Bank Financial examined export sensitivity among four economies – comparing their share of exports to gross domestic product – and found that the United States may be the least sensitive to decreasing trade flows, while the Eurozone is the most sensitive. Canada is somewhere between the two.

The rankings come at an interesting time: Escalating trade tariffs and the threats of more in the works coincide with falling trade volumes. Drawing on data from the CPB World Trade Monitor, National Bank noted that volumes are on track to decline in the second quarter for the first time in two years.

“With the world economy seemingly moving towards a full blown trade war, it’s unclear if global trade volumes can bounce back quickly,” the economists said in a note. “And since a deceleration in trade flows has historically been associated with slower world GDP growth, investors are rightly concerned about protectionist policies.”

Here’s the takeaway for investors: The year-to-date returns for the four regions represented in the National Bank chart (using Germany’s DAX index as a decent proxy for the Eurozone) line up remarkably well with exposure to exports.

That is, the S&P 500 is performing comparatively well, with a gain of 2.1 per cent this year, while the DAX trails all four regions with year-to-date decline of 8.2 per cent (also in U.S.-dollar terms). Canada is in the middle: The S&P/TSX composite is down 4.9 per cent in U.S.-dollar terms.

If you need convincing that global trade has emerged as a key theme in the stock market this year, these returns might do the job.

NATIONS MOST EXPOSED TO DE-GLOBALIZATION

Share of exports in GDP

50%

Eurozone

45

40

35

Canada

30

25

20

Japan

15

U.S.

10

5

2018

2000

2005

2010

2015

Q1

equity returns

In U.S. dollar terms, year-to-date.

DAX*

(Europe):

-8.2%

S&P/TSX

(Canada):

-4.9%

Nikkei 225

(Japan):

+0.4%

S&P 500

(US):

+2.1%

*German market, as a stand-in for Eurozone

THE GLOBE AND MAIL

SOURCE: NATIONAL BANK; bloomberg

NATIONS MOST EXPOSED TO DE-GLOBALIZATION

Share of exports in GDP

50%

Eurozone

45

40

35

Canada

30

25

20

Japan

15

U.S.

10

5

2018

2000

2005

2010

2015

Q1

equity returns

In U.S. dollar terms, year-to-date.

S&P/TSX

(Canada):

-4.9%

DAX*

(Europe):

-8.2%

Nikkei 225

(Japan):

+0.4%

S&P 500

(US):

+2.1%

*German market, as a stand-in for Eurozone

THE GLOBE AND MAIL, SOURCE: NATIONAL BANK; bloomberg

NATIONS MOST EXPOSED TO DE-GLOBALIZATION

Share of exports in GDP

50%

Eurozone

45

40

35

Canada

30

25

20

Japan

15

U.S.

10

5

2018

2000

2005

2010

2015

Q1

equity returns

In U.S. dollar terms, year-to-date.

S&P/TSX

(Canada):

-4.9%

DAX*

(Europe):

-8.2%

Nikkei 225

(Japan):

+0.4%

S&P 500

(US):

+2.1%

*German market, as a stand-in for Eurozone

THE GLOBE AND MAIL, SOURCE: NATIONAL BANK; bloomberg

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