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| Past Events: COVID-19 Webinar Series |
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COVID-19 and Supply Chain Risk
27 November 2020 | 11:00–12:15 (GMT+8) | Zoom |
Speaker
Prof. Jing Wu
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Assistant Professor, Department of Decision Sciences and Managerial Economics, CUHK Business School
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Discussants
Prof. Vernon N. Hsu
Prof. Sean X. Zhou
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Choh-Ming Li Professor of Decision Sciences and Managerial Economics, CUHK Business School
Chairperson, Department of Decision Sciences and Managerial Economics, CUHK Business School
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Moderator
Prof. Fanny M. Cheung
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Senior Advisor, Faculty of Social Science and HKIAPS, CUHK
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In this webinar, Prof. Jing Wu examined how supply chain activity was reflected in credit risk during different phases of the COVID-19 pandemic. Specifically, he examined credit default swap (CDS) spreads and US-China supply chain links. In his analysis, the propagation of credit risk had considerable effects. The CDS spreads of firms with Chinese supply chain partners increased in parallel with supply chain disruptions during the economic shutdown period of the pandemic. Furthermore, following the re-opening in China, these spreads decreased as economic activity resumed in that country. He also found that household demand was an important driver of this supply chain credit risk behaviour. The resumption of supply chain activity alone was not enough to lead to a decrease in the credit risk of sectors catering to household demand during periods of dampened household spending. Therefore, having a more global customer base could mitigate the effects of shocks to local household demand. While a firm’s leverage and the duration of its supply chain magnified its supply chain driven credit risk during the pandemic, cash holdings, growth opportunities, an investment-grade rating, and the centralization of supply chain networks moderated such effects.
Prof. Vernon N. Hsu continued the discussion by exploring two types of global supply chains during the COVID-19 pandemic: the off-shore and the near-shore/re-shore. He contended that diversifying global supply chains is important to mitigate risk, and that supply chains might become more segmented as a result of the regionalization of production and consumption.
Prof. Sean X. Zhou extended the discussion by reviewing the impacts of COVID-19 on global supply chains. He examined the status quo of supply chains under the pandemic, the impacts of COVID-19 on the credit risks of firms, and the role of supply chain linkages in disruptions.
Around 35 participants attended the webinar.
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