On July 5, the Southern University of Science and Technology (SUSTech) hosted Myron S. Scholes, Nobel Laureate in Economic Sciences and Professor of Finance, Emeritus, at the Stanford Graduate School of Business, as part of the SUSTech Lecture Series.

Professor Scholes’ presentation, titled “Time and Uncertainty”, took place at the SUSTech Convention Center, drawing an audience of over 800 faculty members, students, and industry professionals.

In her opening remarks, Hong JIANG, University Council Chairperson, highlighted the unique and evolving nature of the College of Business at SUSTech. She emphasized the University’s commitment to creating an integrated platform that brings together scientists, entrepreneurs, and financiers to foster innovation and entrepreneurship, ultimately driving social progress through scientific and technological advancements.

Chairperson JIANG noted that Professor Myron S. Scholes is a distinguished economist whose groundbreaking work on option pricing theory, corporate finance, capital markets, and tax strategies has left an indelible mark on the field. She expressed hope for future collaborations between Professor Scholes and SUSTech, particularly in business development and talent training.

Known as the father of modern option pricing theory, Professor Myron S. Scholes developed the Black-Scholes option pricing model, earning him the Nobel Memorial Prize in Economic Sciences in 1997 alongside Professor Robert C. Merton of Harvard University. The Black-Scholes model has been instrumental in the valuation of securities and options, facilitating the growth of the derivative financial commodity trading market and providing investors with effective tools for financing and risk management.

During his lecture, Professor Scholes explored the theme of “Time and Uncertainty: Changing Discount Rates”. He reviewed the evolution of financial theory and the pivotal contributions of scholars such as Harry Markowitz, William Sharpe, Merton Miller, and Irving Fisher, whose work on the relationship between risk and return has significantly advanced the field of finance.

He underscored the importance of dynamic risk management, emphasizing that effective risk management should focus on the evolving nature of risks and their implications for investment decisions. By developing models to address uncertainty, risks can be better anticipated and managed.

Professor Scholes also discussed asset allocation, detailing how scientific asset allocation and diversification strategies can help manage risks and optimize investment returns. He stressed the need for investors to focus on long-term risk management, utilizing diversified investments, trust considerations, tracking error management, and insurance strategies to achieve stable returns in a volatile market.

He highlighted the significance of tail events and compound returns, noting that investors only have one run of time. Therefore, it is crucial to prioritize compound returns over average returns.

Emphasizing the important role of the options market in risk management, Professor Scholes stressed that the options market offers valuable insights into future volatility and market expectations, enabling investors to manage downside risks and enhance portfolio performance. He illustrated the options market’s predictive advantages using empirical data, noting that implied volatility is a key indicator of future market risk expectations.

After the lecture, Hong JIANG presented Myron S. Scholes with a commemorative certificate in recognition of his participation in the SUSTech Lecture series.

During the roundtable discussion, Li JIN, Vice President of SUSTech and Acting Dean of the College of Business, joined Professor Scholes in discussing the application of artificial intelligence in finance, the importance of financial risk management, and the influence of trust and governance structures on investment management. In the interactive segment, Professor Scholes engaged with the audience, addressing their questions and insights.

The event was organized by the College of Business at SUSTech, with support from the SUSTech Institute of Finance and Technology and CITIC Press Group.