Hanhealthinvacc Discussion Threads

[ariane] 06/8/2019 13:58

WORLDOIL.COM


Norwegian wealth fund�s bid to divest oil stocks loses momentum
By Mikael Holter on 8/6/2019

OSLO (Bloomberg) --After revealing it wants to dump all oil stocks in a market-shattering bang in 2017, Norway�s $1.1 trillion wealth fund�s actual divestment could now be so small it hardly matters.

The fund�s initial plan was heavily diluted in a political compromise that shielded the world�s biggest oil companies. Now technical adjustments look set to reduce the divestment by a further 30%, meaning the selloff would be smaller than the fund�s roughly $6 billion stake in oil giant Royal Dutch Shell.

It�s �like the mountain that gave birth to a mouse,� said Knut Anton Mork, an economics professor and former bank economist who�s followed the fund�s development and led a commission on its strategy.

The world�s biggest wealth fund, built from decades of petroleum production to safeguard future generations of Norwegians, sent shock waves through global markets when it said it wanted to sell $37 billion in oil and gas stocks. While the fund argued it was a move to better spread Norway�s overall risk, the announcement was seized upon by climate activists as a key moment for fossil-fuel divestment movement.

But the Norwegian government, fronted by two petroleum-friendly parties, decided in March to spare the big integrated companies such as Shell and BP, partly because they invest in renewable energy. Instead the selloff would only include pure exploration and production companies, whittling down the divestment to about $7.8 billion. But that estimate was based on a category from index provider FTSE Russell that also included marketing, refining and petrochemical companies.

Since then, the classification system has changed to include a �crude producers� category stripped of downstream. The fund will give its advice on the final details of the divestment to the Finance Ministry by mid-September and declined to comment until then.

Mork, as well as SpareBank 1 Markets Chief Economist Harald Magnus Andreassen, both said it�s likely that the Finance Ministry will pick the �crude producers� category for the divestment.

The fund�s holdings in that group at the end of 2018 was $5.7 billion, according to Bloomberg calculations. Its 2.5% stake in Shell was worth $5.9 billion at the same time.

Andreassen, who participated in a government-led panel that advised against the original plan because it viewed even that as a marginal insurance against lower oil prices, said there�s now �nothing left� of the fund�s initial proposal.

�The resulting compromise doesn�t have anything to do with an oil-price insurance anymore,� he said. �This looks like a symbolic measure.�

Steinar Holden, an economics professor at University of Oslo who supported the initial proposal, said it was �a pity� the plan didn�t go through and that the effect was now �small.�

In an emailed response to questions, State Secretary Marianne Groth repeated the Finance Ministry�s argument that the divestment was appropriate even though the impact will �probably be limited.�

�Since the state�s petroleum income mainly comes from upstream activity, it�s more accurate to remove upstream companies, rather than to exit a broadly diversified energy sector altogether,� she said.

Scandalous

Activists and legislators are vowing not to give up on making the divestment more meaningful. The plan has not only lost its clout as a means to spread Norway�s risk, but its value as a figurehead for the global campaign against fossil fuels has also been diminished.

The dilution of the proposal is �completely scandalous,� said Martin Norman, Greenpeace�s finance campaign director for the Nordics.

The opposition Socialist Left Party, which has vowed to fight to broaden the exclusion to include integrated oil companies, said the latest estimate for the divestment, equal to just 0.5% of the fund�s value, only strengthened its point.

�We�ve always viewed this as the first step,� lawmaker Freddy Andre Ovstegard said by phone. �We need to pull the fund out of all fossil energy."

[grupo] 07/6/2019 09:22

Russian sovereign wealth fund says US allegations against Huawei are unproven and unfair
Published an hour agoUpdated 10 min ago
Sam Meredith
@smeredith19




watch now
VIDEO02:59
US using competition unfairly and damaging world economy, RDIF CEO says

The head of Russia’s sovereign investment fund has urged the U.S. to back-up claims that China’s Huawei represents a national security threat.

The U.S. has led allegations that Huawei’s equipment can be used by Beijing for espionage operations, with Washington calling on Western allies to bar the company from next-generation 5G networks.

Huawei has repeatedly denied the allegations against it.

Huawei has become a point of contention in a broader trade dispute between Washington and Beijing, with other countries under pressure to decide whether to allow the world’s largest maker of telecom equipment to help build their 5G networks.

On Wednesday, Huawei announced it had signed a deal with Russia’s top mobile operator MTS to develop 5G technology in Russia.

Speaking to CNBC’s Geoff Cutmore at the St Petersburg International Economic Forum (SPIEF), Kirill Dmitriev, the chief executive of the Russian Direct Investment Fund (RDIF), said the U.S. had failed to provide evidence that Huawei represents a prohibitive security risk.

“First of all, it has not been proven. We need to have some really clear evidence and I’m sure our people will look into this and, if it happens, it will not be the case,” Dmitriev said, when asked whether he had concerns about possible Chinese surveillance.

“But, what we are concerned about is allegations like this are thrown in without any proof and used for unfair practices.”
Russia wants to be ‘friends’ with the U.S. and China

The U.S. has targeted Huawei by putting the company on a blacklist that restricts its access to U.S. technology — on which it heavily relies.

RDIF’s Dmitriev said the U.S. should be viewed as the “pillar of capitalism.” But, unproven allegations against Huawei showed the U.S. was “using competition unfairly and that is not a good thing for the world economy.”

Russia has been courting Chinese investment at its annual business conference this week.

China’s commerce ministry reportedly said Thursday that Beijing and Moscow had signed more than $20 billion of deals to boost economic ties in areas such as technology and energy following President Xi Jinping’s summit with his “best friend” President Vladimir Putin.
watch now
VIDEO01:23
‘No shady dealings’ around 2016 US presidential election: RDIF CEO

It comes at a time when the White House has attempted to put pressure on countries prepared to invite Huawei inside their networks. The U.S. has even said it would be prepared to limit intelligence sharing with allies who continue to use the company’s technology.

The 5G networking standard is seen as critical because it can support the next generation of mobile devices.

“We will be friends with China and by the way we want to be friends with the U.S., with Europe so it is not a friendship against anybody else,” RDIF’s Dmitriev said.

[waldron] 25/5/2019 12:21

The Times: Sirius Minerals, the developer of a huge fertiliser mine in North Yorkshire, has secured a new high-profile backer in the form of Qatar’s sovereign wealth fund.

[waldron] 08/5/2019 15:39

PROACTIVEINVESTORS


Norwegian sovereign wealth fund buys into Sirius Minerals on open market
14:48 08 May 2019
Berenberg cuts price target from 40p to 35p but says “fundamentally, we remain positive on the project’s longer-term credentials”
norway
Norway's state-owned fund has bought a 3.5% stake in the fertiliser miner

Norway’s US$1trn sovereign wealth fund has snapped up shares in Yorkshire-based polyhalite miner Sirius Minerals PLC (LON:SXX) on the open market as the UK company looks to secure long-term funding for its huge underground mine.

It was confirmed this week that the Oslo-based fund, the largest such fund in the world, now owns a 3.5% stake in the London-listed outfit. The share are held under the name of Norges Bank, the country’s central bank, which manages the wealth fund.
READ: Sirius Minerals is now at a ‘critical juncture’ as financing efforts continue

The Norwegians snaffled a total of 166.52mln shares, completing the purchase on Thursday 2 May. Of this, 115.45mln shares were held directly by the fund, representing 2.4% of Sirius’s shares, plus another 51.08mln that was said to be on loan. Many funds that buy shares on a long basis also loan some of their shares to hedge funds and others who want to take short positions, with a right to recall them.

This came a day after Sirius, as part of a planned US$3.8bn project financing plan, confirmed that its brokers had tied up a US$425mln placing with City institutions at a price of 15p per share. The placing was priced at the bottom of the 15-18p range previously indicated, even though the funding was said to have been oversubscribed.

Sirius’s broker Shore Capital would not confirm if Norges Bank had been in direct contact, but confirmed that shares from the placing will not be issued until after the group’s shareholders convene for a general meeting, which is expected to be on 23 May.

The Norges Bank share purchase was therefore made on the open market, though at what price at it has not confirmed. Having hit a three-year low of 15.5p on the Wednesday, the shares rose to a daily high of 17.15p on the following day and fell as low as 16.31p, before closing at 16.53p.

But as part of this stage of the finanacing, the Norwegian fund will along with all existing shareholders be able to take part in the open offer element of the fundraising, also priced at 15p apiece, with each shareholder having the opportunity to buy one share for every 22 they already own.
READ: Oilers shaken as Norwegian sovereign wealth fund decides to dump sector stocks

The purchase of shares in Sirius, comes as the sovereign wealth fund pivots away from its historic focus on oil. Originally formed as Norway’s ‘oil fund’ with the piles of cash generated by the country’s vast petroleum reserves, the Government Pension Fund Global, as it is officially known, has been told by the Norwegian government to focus less on oil and gas exploration and production companies.

Sirius is raising funds to continue development of its Woodsmith mine in North Yorkshire, which will produce polyhalite, a mineral that is seen as an attractive multi-nutrient fertiliser and for which it has secured a number of off-take agreements.
Analyst positive on long-term project

This week, Berenberg analyst Rikin Patel said the long-awaited stage-two financing package, which as well as the US$425mln share placing, also includes a proposed convertible bond offering, a US$500mln high yield bond and a revolving credit facility providing US$2.5bn of finance, would cover the entire development capital required by the Woodsmith project and “goes some way to de-risking the viability of the project”.

The company is not out of the woods yet, Berenberg said. “While this package clears some hurdles surrounding the project, financing is by no means guaranteed and the company remains in a crucial phase to secure long-term funding.”

Patel said the package still left some uncertainty about mid-term financing, although less than previously, and he was confident that funding would be secured from the high yield market.

“While shareholders may face some dilution in the short term, fundamentally, we remain positive on the project’s longer-term credentials,” he said, adding that the economics and valuation are “still favourable”, with conservative assumptions on pricing, volumes and capex leading to a forecast internal rate of return of 15% and an price/net present value ratio of 0.4 times.

Sirius shares were up 5% to 15.98p in Wednesday afternoon.

[sarkasm] 03/5/2019 12:32

US tech stocks push Norway’s $1 trillion oil fund to best ever gains
Published an hour agoUpdated an hour ago
David Reid
@cnbcdavy




Key Points

The world’s largest sovereign wealth fund just had its best quarter ever.
US tech stocks were the main driver of gains.
The Norwegian Sovereign wealth fund took the opportunity to buy up stocks in the final two months of 2018.

Premium: Norway oil fund gas drilling
A visitor looks out towards a flare stack on the Oseberg A offshore gas platform operated by Statoil ASA in the North Sea 140kms from Bergen, Norway.
Kristian Helgesen I Bloomberg via Getty Images

The world’s largest sovereign wealth fund just posted its most successful quarterly return ever.

Norges Bank, which manages Norway’s $1 trillion oil-funded wealth pot, said a strong recovery in global stock markets across the first three months of 2019 had generated a 9.1% return overall. In Norwegian krone terms it was the investor’s largest ever increase at 738 billion Norwegian krone ($84 billion).

The Government Pension Fund Global, as it is officially known, currently sits at around $1.05 trillion in overall value. The aim of the fund is to ensure a future source of wealth from current revenue derived from Norway’s oil and gas sales.

As of March 31, 2019, the fund was invested 69.2% in equities, 2.8% in unlisted real estate and 28% in fixed income.

The fund’s largest equity holdings as of the end of March were in Apple, Microsoft, Google-parent Alphabet and Amazon. According to Norges Bank, those tech stocks were the bulk of the strongest-performing sector for the fund, returning 17.6% in growth during the quarter.

In its report, Norges Bank said oil and gas stocks as well as industrials also performed strongly.

“This is the fund’s best quarterly return measured in krone ever. As a major equity investor, we must be prepared for large fluctuations in the fund’s market value in line with developments in global stock markets,” said Yngve Slyngstad, CEO of Norges Bank Investment Management, in a press release Friday.

The oil fund’s performance marked a reversal from the last three months of 2018 when the fund posted its largest ever drop in krone value.

During that spell of market turmoil, Norges Bank went on a stock buying spree, taking advantage of dipping prices to buy stocks worth 185 billion krone.

[la forge] 20/4/2019 07:50

Financial Times: Qatar’s sovereign wealth fund and US real estate group Crown Acquisitions are acquiring a stake in some of New York’s most iconic properties in Times Square and along Fifth Avenue.

[grupo guitarlumber] 06/4/2019 10:20

Financial Times: Norway’s $1 trillion sovereign wealth fund could be forced to cut exposure to miners BHP Group and Glencore under new plans to tighten restrictions on coal investments.

[maywillow] 20/3/2019 18:24

What Norway’s Big Divestment Decision Means for Fracking, Tar Sands and Global Oil Exploration
By Justin Mikulka, originally published by DeSmog Blog

March 20, 2019

Norway’s sovereign wealth fund — a state-owned investment fund worth approximately a trillion dollars — recently announced it was divesting from oil and gas exploration companies around the world. Not surprisingly, many oil and gas stocks declined following the announcement.

While this is good news for the climate, this was simply a smart business decision. Norway’s sovereign wealth fund, known as the Government Pension Fund Global (GPFG), primarily exists due to Norwegian oil production. And the fund will continue to be a major investor in companies like Exxon.

It appears it’s just cutting its losses on money-losing endeavors like fracking in America, tar sands oil production in Canada, and frontier exploration by UK companies in Africa and South-East Asia.

“The government is proposing to exclude companies classified as exploration and production (E&P) companies within the energy sector from the [fund] to reduce the aggregate oil price risk in the Norwegian economy,” the Finance Ministry explained in a statement announcing the move.

Dumping Losing Assets

What that translates to in America is essentially a divestment from the shale oil and gas producers like EOG Resources, Apache, Continental, Diamondback, and Chesapeake. Apparently, the fund managers are tired of losing money on fracked oil and gas.

The move certainly comes at a bad time for the American fracking industry. Their previously endless supply of loans from Wall Street has also started to dry up, leading to budget cuts, layoffs, and reduced oil production.

In Canada, among the companies targeted for divestment is Canadian Natural Resources, LTD — an Alberta tar sands oil producer. The Canadian tar sands oil industry has been losing money for several years and several major oil companies have sold tar sands assets, including Devon Energy’s recent announcement it was getting out of the tar sands production business.

The Canadian government is now propping up the failing business model for Alberta’s tar sands, but Norway’s state fund doesn’t seem impressed. Of course, Norwegian investors sitting on a trillion dollars in the government’s sovereign wealth fund have reason to be skeptical of the Canadian government’s acumen for handling the oil business. Compared to Norway, Canada’s own oil-backed sovereign wealth fund is a complete disaster, with a mere $17 billion dollars.

Norway’s state wealth managers appear to have taken a good, hard look at the finances of these American and Canadian companies and recognized losing money was bad for business.

In addition, Norway seems to have peered across the sea toward the UK and seen nothing but wells (and profits) drying up.

The UK‘s North Sea fossil fuel sector has hit a “$10 billion impasse” since oil prices plummeted last year. And among the companies that Norway has pledged to pull its investments from are Nostrum, Ophir, Premier, Soco, and Tullow — all of which are listed on the London Stock Exchange.

Tullow Oil’s London Stock Exchange share price, in pence sterling.

Premier remains a major player in oil and gas extraction on the UK‘s side of the North Sea. But the trend in that region is definitely towards decommissioning rather than exploration — and Norway’s fund has clearly read the runes.

That downward trend is partly what has led a lot of UK fossil fuel companies to look further afield. Tullow claims to be Africa’s “largest independent oil and gas producer,” and Ophir has assets in Tanzania, Mexico, and South East Asia. Nostrum operates in former Soviet Union countries, and Soco has assets in Vietnam.

DeSmog UK‘s Empire Oil investigation previously outlined how companies like these were operating in frontier markets in some of the most politically unstable regions in the world with limited regulatory oversight or concern for the communites they impact.

With hundreds of thousands of schoolchildren taking to the streets calling on leaders not to lock countries into high-carbon futures, Norway seems to be going with the flow and no longer wants to be associated with this oddly neo-colonialist activity.
Financial Press Works to Downplay Reality

ConocoPhillips oil platform in the North Sea off NorwayConocoPhillips oil platform in the Norwegian sector of the North Sea. Credit: Knudsens Fotosenter, DEXTRA Photo, CC BY 4.0

While some headlines initially misrepresented this move by claiming Norway was divesting completely from the oil and gas business, the fund’s divestment from just exploration and production companies still represents a significant comment on the long-term financial viability of the targeted companies.

Still, this early media misstep led to some aggressive pushback from members of the financial media. One Forbes columnist went so far as to call coverage of the Norwegian fund’s latest investment decision “fake news” and wrote “the bottom line is that Norway’s GPFG is not divesting its energy holdings.”

However, that might come as a surprise to all of the energy companies being dumped by the fund.

Another Forbes columnist argued that this move was just a minor change and concluded:

“But in the grand scheme, even such a significant divestment is a tiny drop in the bucket compared to the scope of the world’s oil and gas sector. If the world keeps buying fossil fuels, companies are going to make money selling them, and investors are going to make money owning them.”

Perhaps these columnists are right and Norway’s move should be ignored and all of these oil and gas companies have a bright future.

Or perhaps — like when the GPFG divested from 122 coal companies in 2015 — the fund is just ahead of the curve.
Climate Risk Acknowledged as ‘Important Financial Risk Factor’

The recent divestment was a business decision to limit the Norwegian government’s exposure to oil price risk and was not made out of concern for the rapidly warming climate. However, the fund’s managers are concerned about the impacts of climate change on its investments, which did factor into this decision.

In the white paper “Energy Stocks in the Government Pension Fund Global” released as part of the decision, the authors acknowledge that climate policy may negatively impact some of its energy holdings, which in turn will affect future investment decisions.

“Climate risk is an important financial risk factor for the GPFG. Climate change, climate policy, and their effect on technological developments may over time have an impact on several of the companies in which the GPFG is invested, including those in the energy sector.”

The team managing Norway’s state investments is concerned about the financial risks of climate policy but only from an investment standpoint.

Norway has been very shrewd in converting its oil resources into a massive diversified fund that supports the Norwegian economy. The move is something countries such as Canada and the UK could have replicated but instead they passed up the opportunity.

While Canada is doubling down on the oil industry — using taxpayer money to overpay for pipelines and bail out the oil-by-rail industry — and the UK continues to prop-up a domestic offshore oil industry in irreversible decline, Norway is divesting from companies that expose it to the risk of those same industries.

Based on Norway’s track record, including offloading coal investments in 2015, the odds are looking good for its decisions.

Additional reporting by Mat Hope.

[adrian j boris] 02/3/2019 12:17

Mar 2, 2019, 05:39am
Norway Fund Buys On Weakness, And Backs Britain
Heather Farmbrough
Heather Farmbrough
Contributor
Tweet This

“With our time horizon, which is 30 years plus, current political discussions do not change our view of the situation,”

The Aasta Hansteen gas platform operated by Statoil ASA near Stord, Norway, on Thursday, March 8, 2018.© 2018 Bloomberg Finance LP

When the world’s largest sovereign wealth fund speaks, investors tend to listen. This week the Norwegian Government’s Pension Fund, which owns 1.4% of all the world’s listed companies, said that it had bought equities during the market’s rout from November to January and that it intended to increase its holdings in British equities, assets, and bonds, regardless of the outcome of the negotiations on Brexit.

“The fund net bought equities for 185bn NOK in fourth quarter 2018. Most of this was bought in November and December,” Yngve Slyngstad, CEO of Norges Bank Investment Management, said.

In a tough year for global investors, the fund delivered a negative return of -6.1% over 2018. Equity investments returned -9.5%, while investments in unlisted real estate returned 7.5%. The market value of the fund's assets fell to Nkr8.25 trillion ($966 billion) from Nkr8.5 trillion at the end of 2017.

“Although performance was weak in 2018, the long-term return has been good and higher than the return on the benchmark index,” said Øystein Olsen, Chair of the Executive Board of Norges Bank which manages the fund.

The commitment to Britain reflects a view held by some British investors [link] that many U.K. stocks are now becoming attractive again. Slyngstad confirmed that British stocks were among those bought up by the fund at the end of last year and early 2019.
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“We will continue to be significant investors in Britain”, Slyngstad said. “And we foresee that over time that our investments in the UK will increase.”

“With our time horizon, which is 30 years plus, current political discussions do not change our view of the situation,” he said, when asked about the risks caused by Britain’s plans to quit the EU on March 29.

After U.S. and Japanese companies, the fund’s third-largest equity holdings are in British stocks. The fund's second largest property investments are also in the U.K., including several prestigious Crown Estate properties on Regent St and the West End.

Warren Buffett takes a long term, contrarian approach too.© 2017 Bloomberg Finance LP

Why should investors listen?

Well, it’s Warren Buffet who said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

The fund's contrarian approach is in line with this thinking, and it is also consistent with the ultra-long term approach the fund has always taken. This also tends to deliver the best returns to investors over time, because it involves very little portfolio churning and gives companies a chance to ride out the short term vagaries of financial markets.

Over ten years, the fund has delivered a return of 8.3%, or 36.5% in real terms after annual management charges and inflation. The Norwegian fund owns shares in 9158 companies across the world, including Apple, Nestlé, Microsoft and Samsung.

Set up before Norway found its first oil in 1969 at Ekofisk, the largest oil field ever found at sea, the fund's objective has always been to manage Norway’s oil resources over the long-term and to ensure strong government control over them.

More recently, however, its commitment to sustainability has clashed with the essence of oil and gas exploitation. Writing in the Financial Times, Richard Milne described governance as its ‘potential Achilles heel.’

This reflects a wider Norwegian issue as the country struggles to balance sustainability and its dependence on oil and gas. The Norwegian fund’s 2018 report also shows that it cut its stake in €1bn stake in the German carmaker Volkswagen after a long argument over corporate governance and dismay at its diesel scandal.



Contact me at [e-mail] and read more at @HeatherFarmbro and HeatherFarmbrough.com.