Norway’s wealth fund loses US$174b in first half of 2022

Norway’s wealth fund loses US$174b in first half of 2022

Nicolai Tangen, chief executive officer of Norges Bank Investment Management (NBIM), speaks at a public event held at Trinity Church in Arendal, southern Norway, August 17, 2021. — Reuters pic

Wednesday, 17 Aug 2022 4:28 PM MYT

OSLO, Aug 17 — Norway’s sovereign wealth fund, the world’s largest, made a loss of 1.68 trillion Norwegian crowns (RM777 billion) in the first half of 2022, it said today, as stocks and bonds were hit by global recession fears and rampant price inflation.

The US$1.3 trillion (RM5.8 trillion) fund’s return on investment was a negative 14.4 per cent for the January-June period, although that was 1.14 percentage points ahead of the return on its benchmark index.

“The market has been characterised by rising interest rates, high inflation, and war in Europe,” said Chief Executive Nicolai Tangen of Norges Bank Investment Management, which operates the fund, in a statement.

“Technology stocks have done particularly poorly with a return of minus 28 per cent,” he said.

Founded in 1996, the fund invests revenue from Norway’s oil and gas sector and holds stakes in more than 9,300 companies globally, owning 1.3 per cent of all listed stocks.

Its US$1.3 trillion valuation approximately equates to the size of the Mexican economy, the world’s 16th largest, according to some measures.

All sectors in which the fund invests recorded negative returns in the first half, apart from energy, where returns were 13 per cent as prices soared following Russia’s invasion of Ukraine.

Central banks have hiked interest rates aggressively this year to combat inflation, leading to increased borrowing costs and lowered profit margins for corporations.

The tech-heavy Nasdaq Composite and the broader S&P 500 index saw their biggest January-June declines since the financial crisis, while US and European government bond markets had their worst start to any year in decades.

In total, 68.5 per cent of the fund was invested in equities at the end of June, with 28.3 per cent in fixed income, 3.0 per cent in unlisted real estate and 0.1 per cent in unlisted renewable energy infrastructure. — Reuters