Norway: the largest sovereign wealth fund in the world loses 170 billion euros in the 1st half

Norway: the largest sovereign wealth fund in the world loses 170 billion euros in the 1st half

“This is, in percentage terms, the second largest half-year decline” in the history of the fund, said the Bank of Norway.


(illustration) ( AFP / IGOR GEDILAGHINE )

The largest sovereign wealth fund on the planet, that of Norway,

lost some 1.680 billion crowns (170 billion euros) in the first half, weighed down in particular by technology stocks,

announced the Bank of Norway on Wednesday August 17.

Fueled by oil revenues from the Norwegian state, the enormous woolen stocking suffered a negative return of 14.4% over the first six months of the year, seeing its value fall to 11.657 billion crowns at the end of June.

The technology sector in question

“This is, in percentage terms, the second largest half-year decline” in the history of the fund, topped up since 1996, “and the largest decline in crowns”, noted the fund’s chief, Nicolai Tangen, during a presentation.

Since the beginning of the year, the markets have been rocked by rising interest rates, high inflation due in particular to soaring energy prices, and the war in Ukraine, all of which are fueling recession fears.

It was mainly equity investments that weighed on the fund’s performance with a loss of 17%.

Penalized by the exit from the Covid-19 pandemic,

the technology sector alone generated a loss of some 414 billion crowns (-28%) for the fund,

dragged down by giants like Meta, the parent company of Facebook, Amazon, Apple and Microsoft.

The only exception, energy stocks took 13%, boosted by soaring prices.

Equities accounted for 68.5% of the portfolio at the end of June. The Norwegian fund is present in the capital of some 9,300 companies and controls approximately 1.3% of the world market capitalization. Investments in bonds (28.3% of assets) lost 9.3% while investments in unlisted real estate (3% of the portfolio) gained 7.1%.

Still a marginal asset (0.1% of investments), renewable energy projects not listed on the stock market also suffered a loss of 13.3%.

All of these investments are made outside Norway, the largest exporter of hydrocarbons in Western Europe, so as not to overheat the national economy.

If the financial performance of the first half of the year was poor, the fund regained its colors this summer thanks to the stock market rebound: on Wednesday, according to the counter running live on the site of the Norwegian central bank, it weighed more than 12.300 billion crowns.

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