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Norwegian Wealth Fund Posts Largest Half-Year Loss Ever

Norwegian Wealth Fund Posts Largest Half-Year Loss Ever

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43 minutes ago

Established in the 1990s to invest Norwegian oil and gas earnings abroad, the fund has a portfolio of approximately 9,000 shares.

Established in the 1990s to invest Norwegian oil and gas earnings abroad, the fund has a portfolio of approximately 9,000 shares.

Oil platform in Tromso, Norway

Photo credit: Shutterstock

Norway’s $1.3 trillion sovereign wealth fund posted its biggest ever loss as interest rate hikes, rapid inflation and Russia’s invasion of Ukraine fueled volatility.

The world’s largest fund, based in Oslo, fell 14.4% in the six months to June. The $174 billion loss was the fund’s biggest ever loss in currency terms for half a year, it said Wednesday.

“It’s clear that the market doesn’t go down in a straight line, so I’m not sure if we’ve hit a little bottom here or if the market will continue to be tough,” said CEO Nikolai Tangen. He told Bloomberg Television’s Surveillance on Wednesday.

The world’s largest owner of a listed company has tried to temper expectations since late last year, warning of sharp inflation and declining earnings as a result of the war in Ukraine. Tangen told lawmakers in May that greater uncertainty is the new normal and the fund is facing perhaps the biggest change in 30 years.

In the first half, the fund cut 17% into equities, which accounted for the majority of its investments. Tech stocks fell 28% for him, with Meta Platforms Inc., which owns Facebook and Instagram, and Amazon leading the decline.

The energy sector was the only sector to post a positive 13% return, softening the blow thanks to soaring prices for oil, gas and refined products. Bond losses totaled 9.3%.

Investments in logistics properties increased the fund’s private real estate holdings by 7.1%, but accounted for 3% of assets.

Norway decided on February 27 to exclude Russian assets from its fund following its invasion of Ukraine, but the decision was delayed after Russia banned foreigners from trading on the stock market. I have a problem.

Norges Bank said in March that it would offer to lift the freeze on the fund’s investment in Russia once markets began to function more normally, and would provide more detailed proposals on how to carry out the sale.

Mr Tangen said Wednesday that his Russian holdings remain frozen. “We are not sure where they will end up,” he added.

The fund, which was set up in the 1990s to invest Norwegian oil and gas earnings abroad, has a portfolio of around 9,000 shares and drilled into renewable infrastructure for the first time last year.

Overall, the fund’s total return in the first half was 1.14 points higher than the benchmark that measures itself. Equity investments in the US and UK made the most positive contribution to relative returns, while Chinese equities were the most negative.

“For the first time in 20 years, we have generated excess returns in a plummeting stock market,” the fund said. “We cannot expect similarly strong relative returns in the future.”

©2022 Bloomberg LP


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http://www.luxtimes.lu/en/business-finance/norway-s-wealth-fund-posts-biggest-ever-half-year-loss-62fcdf6ede135b9236c9f679 Norwegian Wealth Fund Posts Largest Half-Year Loss Ever

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