All the prominent scholars who are presenting papers today will analyse some of the aspects of how and why market risk premiums vary. Financial regulations and financial frictions are  BIS central bankers’ speeches  1  important to our understanding of why risk premiums change over time. A thorough understanding of financial regulations and financial frictions might also be important in identifying unique investor characteristics. Axel Weber will shed light on the implications of financial sector regulation on the functioning of markets and the pricing of assets. Lasse Pedersen has provided valuable research on the micro structure of funding markets and how liquidity risks create systemic problems. In particular, he will cover frictions in financial markets. It is quite clear that the Government Pension Fund differs from the average investor in important respects. In addition, we need to understand how variation in risk premiums can be consistent with highly competitive financial markets. Why don’t all investors buy “value” or rebalance? Ken Froot will talk about rare events and disaster risks, how these events are priced in markets. He will also give insights on individual investor characteristics which give comparative advantages in holding these priced risk premiums. Ken French will speak about two ways for an investor to generate excess returns: informational advantages and systematically harvesting risk premiums which the investor has a comparative advantage in holding. Both Froot and French will mainly talk about average portfolio weights in highly competitive markets.
Mr Latter gives a tour d’horizon of the current situation on the world financial markets  Text of the opening address by Tony Latter, a Deputy Chief Executive of the Hong Kong Monetary Authority, to the Asia Pacific Issuers and Investors Forum, in Hong Kong on 7 December 1999. *  *  *  As we leave the twentieth century behind, the major regions of the world economy appear to be in quite good shape. North America is buoyant; Europe is positioned for more solid growth than of late, albeit only by its own rather modest standards; Japan may be moving forward, even if we have seen too many false dawns to be entirely confident; and the rest of Asia has recovered from the 1997 setback more strongly and quickly than most people expected. Meanwhile, major stock markets look set to end the millennium at or near all-time highs, with the notable exception of Japan, where the Nikkei is still at only about half its peak of more than ten years ago. It is also a confident end to the decade, century and millennium for “markets” in a broader sense. The 20th century has witnessed a considerable ebb and flow of fashions in economics, between allegiances to systems which afford primacy to market forces and those which yield varying degrees of control to the state. As it turns out, the former have held sway.