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[waldron] 26/11/2017 19:53

Norway's $1 Trillion Wealth Fund Steps Up `No' Votes on CEO Pay
By Mikael Holter
26 novembre 2017 à 12:00 UTC+1

NBIM executive says fund will provide more details in February
Wants stricter and clearer rules in companies it invests in

Pedestrians pass tramlines and commercial properties in the city center in Oslo, Norway.

Photographer: Krister Soerboe/Bloomberg

When Norway’s $1 trillion sovereign wealth fund said it wanted companies to curb excessive and opaque top-management pay, it meant business.

Since releasing a position paper in April, the world’s biggest wealth fund has increased the number of votes against management compensation proposals in the companies it invests in, Carine Smith Ihenacho, its global head of ownership strategies, said in an interview in Oslo.

It has this year voted against pay plans at Alphabet Inc., Google’s holding company, offshore driller Noble Corp. and media company Liberty Global Plc, among others. The fund was unable to provide aggregated statistics on its publicly available votes, but plans to do so in connection with its annual report on responsible investment, due in February.

Built on the country’s petroleum income over the past 20 years, Norway’s wealth fund has more than doubled in size since 2012 and crossed the $1 trillion mark earlier this year. It owns about 1.5 percent of all listed stocks in the world and invests in almost 9,000 companies, having opted to hold equities, bonds and real estate abroad to avoid spurring inflation in Norway.
Ethical Guidelines

The fund operates according to a set of ethical guidelines that span from human rights to environmental issues, and has cut its investments in tobacco and certain weapons producers, as well as in mining and in utilities that rely heavily on coal. It’s also taken on a more activist role in voting on management proposals, after flagging preferences such as the separation of CEO and chairman positions.

The fund earlier this year urged companies to ensure that a “substantial proportion” of annual pay be provided as shares that are locked in for at least five years, but preferably 10. Pay practices should also be simple and total remuneration should be transparent.

The fund has strict guidelines of its own. For example, it bars its senior executives from receiving performance-based bonuses and sets management wages at “competitive levels” while avoiding becoming the market leader. Its CEO, Yngve Slyngstad, earned $810,000 last year.

NBIM regularly talks to individual companies, including about pay, Smith Ihenacho said, declining to comment on how the fund plans to vote in the next big round of general meetings in May and June next year.

“We have issued a position paper on what we believe to be good remuneration practices,” she said. “We’re primarily hoping that companies will follow those, rather than us finding a lot of companies to vote against.”

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[maywillow] 17/11/2017 22:43

Finance
Sovereign Funds Should Sell Off Oil Assets
Norway's setting a good example for Middle Eastern states with large rainy-day funds.
by Leonid Bershidsky
2
17 novembre 2017 à 18:26 UTC+1

Dusk. Photographer: Spencer Platt/Getty Images

It's easy to see the oil and gas asset sell-off proposed by Norges Bank Investment Management, the entity that runs Norway's $1 trillion sovereign wealth fund, as a bet on the hydrocarbon industry's long-term decline. Indeed, Siv Jensen, Norway's finance minister and the proposal's addressee, predicted such a decline in a conference speech on Friday. But there's a better reason for oil-based sovereign funds to change their thinking.

Economist Sony Kapoor, whose think tank, Re-Define, has long campaigned for the Norwegian Government Pension Fund's oil and gas divestment, laid it out in a report published in 2013:

Because the Fund gets new money from the sale of oil and gas every year, its final value (when the oil runs out) is very highly dependent on the price at which it is able to sell this oil. This means that the Fund has a large negative exposure to policy actions that need to be taken to tackle climate change. Any increase in the rise of the price of carbon emissions or restriction in their quantity will have a negative impact on the final value of the Fund. Despite this large exposure to carbon, the GPF continues to invest heavily in oil and gas majors, which account for three out of its ten largest investments.

Four years later, the fund's managers accepted the argument. In their letter to the finance ministry, they write that regardless of how hydrocarbon assets will perform in the future, the double exposure -- through the revenues that flow into the fund and through its investments -- increases the risk that the rainy-day fund is supposed to mitigate. They point out that, at 4 percent of the fund's value, its investments in oil and gas stocks are twice as high as an index-based approach would have allowed -- but these equities are far more sensitive to oil prices than the stock index.

The double exposure to oil fluctuations isn't limited to Norway. Of the world's 20 biggest sovereign-wealth funds, 11 are oil and gas-based. Their portfolios are generally not transparent, but research has shown that they've tended to overinvest in hydrocarbon-related stocks. A 2013 paper by Bernardo Bortolotti of Bocconi University in Milan and his collaborators put the share of total sovereign fund investment in oil and gas at 7.1 percent -- twice as much as financial investors from the same countries generally put in these industries. That share is roughly consistent with a 2010 paper by University of Michigan's Surendranath Jory and collaborators.

In 2008, University of Miami's Vidhi Chhaochharia and the International Monetary Fund's Luc Laeven wrote of an oil bias that was "particularly strong for SWFs from oil producing countries." "The fact that the home countries of some of the largest SWFs are major oil exporters could explain the relatively high share of investments in oil and related industries," the researchers wrote, suggesting that sovereign fund managers tend to invest in they understand best.

It doesn't really matter if one believes that oil is going out of fashion, as salt once did as a valuable commodity. The members of the Organization of the Petroleum Exporting Countries -- the United Arab Emirates, Kuwait, Saudi Arabia, Qatar, Iran, Libya -- have built up some of the biggest sovereign funds, don't think so. In its long-term outlook, published earlier this month, the organization predicts that by 2040, global oil demand will increase by 15.8 million barrels a day, implying an average growth of 0.7 percent a year. Though all the growth is predicted in the developing world -- demand is expected to fall in the rich nations -- that alone shouldn't be a reason to divest hydrocarbon assets. But investing in the industry that feeds the fund is not a good approach from a risk management point of view.

It's also a bad idea from a development standpoint. The sovereign funds have different stated goals -- from macroeconomic stabilization to funding pensions once oil runs out -- but it's always useful to see them also as vehicles for expanding a nation's horizons. Even if a fund invests overseas to prevent the Dutch disease, it's wise and forward-looking for it to invest in industries a country would like to develop at home. With investment comes access to technology and exposure to promising markets. Kapoor of Re-Define advised the Norwegian GPF to go overweight on sustainable energy to align the fund's activity to the Norwegian government's climate goals. Middle Eastern nations don't have to take this advice, but their efforts to diversify their economies could only benefit from diversifying their sovereign funds away from oil and gas.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at [e-mail]

To contact the editor responsible for this story:
Mike Nizza at [e-mail]
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[maywillow] 17/11/2017 10:26

Stocks: Oslo Reviews Oil Holdings -- WSJ
17/11/2017 8:02am
Dow Jones News

Shell A (LSE:RDSA)
Intraday Stock Chart

Today : Friday 17 November 2017
Click Here for more Shell A Charts.

By Dominic Chopping

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 17, 2017).

Norway's sovereign-wealth fund said on Thursday it may stop buying oil and gas stocks, a move that would deprive the energy sector of investment from a $1 trillion asset manager.

The Norwegian central bank, which uses the fund to invest the proceeds of the country's oil industry, said that investing money back into the energy sector amplifies the government's exposure to the price of crude, particularly given the country's majority stake in Statoil ASA.

Oil and gas equities currently account for around 6% of the Government Pension Fund Global's benchmark index, or just more than 300 billion Norwegian kroner ($36.49 billion).

The Stoxx Europe 600 Oil & Gas index drifted lower on the news of the potential divestment. Shares in Statoil fell by as much as 1%. The fund owns large stakes in most of the world's major oil companies, including a 0.92% stake in Chevron Corp., a 0.82% stake in Exxon Mobil Corp., 1.65% in BP PLC and 2.23% in Royal Dutch Shell PLC as of the end of 2016.

"An orderly divestment process over a period of time won't significantly impact share prices," said Jefferies analyst Jason Gammel.

Norges Bank, the central bank, made the proposal to Norway's Ministry of Finance on Thursday, saying that, given its size, the fund accounts for an increasingly large share of the nation's wealth and is an integral part of government fiscal policy. That means that the vulnerability of government wealth to a permanent drop in oil and gas prices would be reduced if the fund pulled out of the stocks in that sector, Norges Bank said.

Two years of weaker oil prices has cut into the income of many of the world's largest sovereign-wealth funds, which are in largely resource-dependent countries like Saudi Arabia and Kuwait.

The Ministry of Finance said the government aims to make a decision in the fall of 2018.

A bank official said that the advice doesn't reflect a view on future oil and gas prices.

Norway's fund was established to harness the country's oil and gas income while also giving the government room for maneuver in fiscal policy should oil prices drop, the mainland economy contract and as its oil eventually runs out.

In September, the fund value reached $1 trillion for the first time after being boosted as the world's major currencies strengthened against the U.S. dollar, combined with strong equity markets.

While the fund's latest proposal was based on concern about overexposure to oil, the fund has been steadily pulling out of mining companies and power producers that derive large portions of income from thermal coal.

Other large investors have launched products that don't invest in fossil fuels.

In April, Storebrand, Norway's largest private-pension fund, said it had launched two new fossil-free funds. Several U.K. pension plans have funds that don't invest in the sector. In 2014, Stanford University said it wouldn't invest in coal-mining companies, and under pressure from environmental activists other U.S. endowment funds have debated whether they should pull out of fossil fuel investments.

On Thursday, Storebrand said in a release that Norge Bank's move should encourage other funds to pressure "oil and gas companies to revisit their investment plans and operations in the transition to a low carbon economy. "

Mr. Gammel, though, said he didn't expect to see a flight of money from the sector.

Sarah Kent contributed to this article.

Write to Dominic Chopping at [e-mail]



(END) Dow Jones Newswires

November 17, 2017 02:47 ET (07:47 GMT)

[grupo guitarlumber] 16/11/2017 18:37

Norway Considers Pulling Its $1 Trillion Wealth Fund Out of Oil Stocks -- 3rd Update
16/11/2017 5:23pm
Dow Jones News

Shell B (LSE:RDSB)
Intraday Stock Chart

Today : Thursday 16 November 2017
Click Here for more Shell B Charts.

By Dominic Chopping

Norway's sovereign-wealth fund said on Thursday it may stop buying oil and gas stocks, a move that would deprive the energy sector of investment from a $1 trillion asset manager.

The Norwegian central bank, which uses the fund to invest the proceeds of the country's oil industry, said that investing money back into the energy sector amplifies the government's exposure to the price of crude, particularly given the country's majority stake in Statoil ASA.

Oil and gas equities currently account for around 6% of the Government Pension Fund Global's benchmark index, or just more than 300 billion Norwegian kroner ($36.49 billion).

The Stoxx Europe 600 Oil & Gas index drifted lower on the news of the potential divestment. Shares in Statoil fell by as much as 1%. The fund owns large stakes in most of the world's major oil companies, including a 0.92% stake in Chevron Corp., a 0.82% stake in Exxon Mobil Corp., 1.65% in BP PLC and 2.23% in Royal Dutch Shell PLC as of the end of 2016.

"An orderly divestment process over a period of time won't significantly impact share prices," said Jefferies analyst Jason Gammel.

Norges Bank, the central bank, made the proposal to Norway's Ministry of Finance on Thursday, saying that, given its size, the fund accounts for an increasingly large share of the nation's wealth and is an integral part of government fiscal policy. That means that the vulnerability of government wealth to a permanent drop in oil and gas prices would be reduced if the fund pulled out of the stocks in that sector, Norges Bank said.

Two years of weaker oil prices has cut into the income of many of the world's largest sovereign-wealth funds, which are in largely resource-dependent countries like Saudi Arabia and Kuwait.

The Ministry of Finance said the government aims to make a decision in the fall of 2018.

A bank official said that the advice doesn't reflect a view on future oil and gas prices.

Norway's fund was established to harness the country's oil and gas income while also giving the government room for maneuver in fiscal policy should oil prices drop, the mainland economy contract and as its oil eventually runs out.

In September, the fund value reached $1 trillion for the first time after being boosted as the world's major currencies strengthened against the U.S. dollar, combined with strong equity markets.

While the fund's latest proposal was based on concern about overexposure to oil, the fund has been steadily pulling out of mining companies and power producers that derive large portions of income from thermal coal.

Other large investors have launched products that don't invest in fossil fuels.

In April, Storebrand, Norway's largest private-pension fund, said it had launched two new fossil-free funds. Several U.K. pension plans have funds that don't invest in the sector. In 2014, Stanford University said it wouldn't invest in coal-mining companies, and under pressure from environmental activists other U.S. endowment funds have debated whether they should pull out of fossil fuel investments.

On Thursday, Storebrand said in a release that Norge Bank's move should encourage other funds to pressure "oil and gas companies to revisit their investment plans and operations in the transition to a low carbon economy. "

Mr. Gammel, though, said he didn't expect to see a flight of money from the sector.

Sarah Kent contributed to this article.

Write to Dominic Chopping at [e-mail]



(END) Dow Jones Newswires

November 16, 2017 12:08 ET (17:08 GMT)

[waldron] 16/11/2017 16:34

Norway Considers Pulling Its $1 Trillion Wealth Fund Out of Oil Stocks -- 2nd Update
16/11/2017 4:27pm
Dow Jones News

Shell A (LSE:RDSA)
Intraday Stock Chart

Today : Thursday 16 November 2017
Click Here for more Shell A Charts.

By Dominic Chopping

Norway's sovereign-wealth fund said on Thursday it may stop buying oil and gas stocks, a move that would deprive the energy sector of investment from a $1 trillion asset manager.

The Norwegian central bank, which uses the fund to invest the proceeds of the country's oil industry, said that investing money back into the energy sector amplifies the government's exposure to the price of crude, particularly given the country's majority stake in Statoil ASA.

Oil and gas equities currently account for around 6% of the Government Pension Fund Global's benchmark index, or just more than 300 billion Norwegian kroner ($36.49 billion).

The Stoxx Europe 600 Oil & Gas index drifted lower on the news of the potential divestment, before recovering. Shares in Statoil fell by as much as 1%. The fund also owns large stakes in most of the world's oil majors, including a 0.92% stake in Chevron Corp., a 0.82% stake in Exxon Mobil Corp., 1.65% in BP PLC and 2.23% in Royal Dutch Shell PLC as of the end of 2016.

"An orderly divestment process over a period of time won't significantly impact share prices," said Jefferies analyst Jason Gammel.

Norges Bank, the central bank, made the proposal to Norway's Ministry of Finance on Thursday, saying that, given its size, the fund accounts for an increasingly large share of the nation's wealth and is an integral part of government fiscal policy. That means that the vulnerability of government wealth to a permanent drop in oil and gas prices would be reduced if the fund pulled out of the stocks in that sector, Norges Bank said.

The Ministry of Finance said the government aims to make a decision in the fall of 2018.

Two years of weaker oil prices has cut into the income of many of the world's largest sovereign-wealth funds, which are in largely resource-dependent countries like Saudi Arabia and Kuwait.

A bank official said that the advice doesn't reflect a view on future oil and gas prices.

Norway's fund was established to harness the country's oil and gas income while also giving the government room for maneuver in fiscal policy should oil prices drop, the mainland economy contract and as its oil eventually runs out.

In September, the fund value reached $1 trillion for the first time after being boosted as the world's major currencies strengthened against the U.S. dollar, combined with strong equity markets.

Stock markets have set record after record in 2017, powered in large part by a revival in U.S. corporate earnings.

While the fund's latest proposal was based on concern about overexposure to oil, the fund has been steadily pulling out of mining companies and power producers that derive large portions of income from thermal coal.

Other large investors have launched products that don't invest in fossil fuels.

In April, Storebrand, Norway's largest private-pension fund, said it had launched two new fossil-free funds. Several U.K. pension schemes have funds which don't invest in the sector. In 2014, Stanford University said it wouldn't invest in coal-mining companies, and amid pressure from environmental activists other U.S. endowment funds have debated whether they should pull out of fossil fuel investments.

On Thursday, Storebrand said in a release that Norge Bank's move should encourage other funds to pressure "oil and gas companies to revisit their investment plans and operations in the transition to a low carbon economy. "

Mr. Gammel, though, said he didn't expect to see a flight of money from the sector.

Sarah Kent contributed to this article.

Write to Dominic Chopping at [e-mail]



(END) Dow Jones Newswires

November 16, 2017 11:12 ET (16:12 GMT)

[ariane] 16/11/2017 13:57

Norway's $1 trillion wealth fund wants out of oil and gas stocks
By Sveinung Sleire on 11/16/2017

OSLO (Bloomberg) -- Norway’s $1 trillion sovereign wealth fund proposed dumping about $35 billion in oil and gas stocks, including Royal Dutch Shell and Exxon Mobil, to protect the economy of western Europe’s biggest petroleum producer.

The nation will be “less vulnerable” to a drop in oil by not being invested in stocks of companies in the industry, the Oslo-based fund said Thursday. The Finance Ministry said it would study the plan and decide at the earliest in “autumn 2018.” The Stoxx Europe 600 Oil and Gas index reversed gains after the announcement, sliding 0.4% in London.

“Our perspective here is to spread the risks for the state’s wealth,” Egil Matsen, the deputy governor at the central bank in charge of overseeing the fund, said in an interview in Oslo Thursday. “We can do that better by not adding oil price risk through the fund.”

The advice constitutes the next major step in scrubbing the world’s biggest wealth fund of climate risk after it largely sold out of coal stocks. While the fund says the plan isn’t based on any view on the future of oil prices or the industry, it will likely add pressure on oil producers, already struggling in a world where renewable energy is gaining sway.

The fund’s largest oil and gas holdings as of 2016 Market Value (USD) are: Royal Dutch Shell $5.36 billion; Exxon Mobil $3.1 billion; Chevron $2.04 billion; BP $2.03 billion; and TOTAL $2.02 billion,

Built from Norway’s oil and gas revenue over the past two decades, the fund takes into account ethical rules encompassing human rights, some weapons production, the environment and tobacco when deciding on investments. Its fossil fuel investments have also come under closer scrutiny as Norwegians increasingly struggle to reconcile their ambition to be a climate leader, while remaining one of the world’s biggest oil and gas nations.

Matsen emphasized that the recommendation is to remove oil and gas stocks from its benchmark index but that it wants to keep them as part of its “investment universe.”

The state also holds majority control of Statoil ASA, valued at $66 billion, as well as direct ownership of offshore oil and gas fields. Norway depends on the oil and gas industry for about 20% of its economic output.

The fund has doubled in value over the past five years and was this year given the go-ahead to boost its stock holding to 70% of its portfolio to help drive returns. Norway last year also withdrew cash for the first time after sinking oil prices opened up holes in the budget.

Today’s recommendation comes at a “good time because the stock portion will now be increased to 70% and that would also mean that we would buy more oil and gas stocks,” Matsen said.

The fund said it doesn’t expect returns or market risk to be affected “appreciably” by excluding oil and gas stocks. The move would also mean raising its investments in other sectors.

Owning close to 1.5% of global stocks, the Norwegian fund largely follows indexes, but is allowed some active management of its portfolio.

[ariane] 16/11/2017 13:55

Singapore sovereign wealth fund moving away from traditional energy

Published 15 November 2017 Last Updated 15 Nov 2017 15:40

Tags Oil & Gas Renewables Asia Pacific

Baron Laudermilk

Share:

Singapore’s sovereign wealth fund, GIC Investment Fund (GIC), will be moving away from investing in traditional energies such as coal-fired power plants, according to a source directly working with the fund

[waldron] 06/11/2017 20:48

Goldman, China’s Sovereign-Wealth Fund Plan Up to $5 Billion in U.S. Investments
China Investment Corp. teaming up with top Wall Street bank on multibillion-dollar investment fund
By Chao Deng and
Lingling Wei in Beijing and
Julie Steinberg in Hong Kong
Nov. 6, 2017 5:15 a.m. ET

BEIJING—Goldman Sachs Group Inc. and China Investment Corp. are partnering on a multibillion-dollar fund to help the giant Chinese sovereign-wealth fund invest in U.S. manufacturing and other sectors, according to people familiar with the matter.

[the grumpy old men] 04/11/2017 11:30

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Singaporean sovereign fund in talks to buy stake in OakNorth
03 November 2017 | 1658 views | 0 buy and sell button

Singapore's Government Investment Corporation (GIC) is close to agreeing a deal to acquire 10% of UK challenger bank OakNorth, according to Sky News.
Citing un-named sources, Sky News says that GIC would buy the stake from Indiabulls, one of the bank's biggest existing shareholders.

Rumours of the deal comes just weeks after OakNorth raised more than £150m from a trio of investors, valuing the company at close to £1bn.

One of a host of new entrants to the UK banking market, OakNorth bills itself as a bank for entrepreneurs, providing loans to small firms, and accepting deposits online.

The bank has made a virtue of its cloud-based technology‎ platform, using machine learning techniques and artificial intelligence tools to build up an £800 million loan book within two years of launch.

Sky News sources say that OakNorth is in advanced talks with a number of banks in North America about licensing its Acorn Machines AI technology for use, underlining an important growth opportunity for the company.