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[waldron] 17/8/2022 14:48

The world’s largest sovereign wealth fund loses $174 billion in the first half, cites inflation and war in Europe


Published Wed, Aug 17 2022
6:54 AM EDT
Updated 17 Min Ago

Hannah Ward-Glenton
@hannahswg
CNBC

Key Points

The $1.3 trillion fund returned a negative 14.4% during the period, as stocks and bonds reacted violently to global recession fears and skyrocketing inflation.


The fund’s return on equity investments slipped 17%, while fixed income investments and unlisted renewable energy infrastructure were down 9.3% and 13.3%, respectively.


Norway’s sovereign wealth fund, the largest in the world, had a loss of 1.68 trillion Norwegian kroner ($174 billion) in the first half of 2022, as stocks markets more broadly saw a tumultuous six months.

The $1.3 trillion fund returned a negative 14.4% during the period, as stocks and bonds reacted violently to global recession fears and skyrocketing inflation. But the fund’s return was 1.14 basis points better than the return of the benchmark index, Norges Bank, the country’s central bank, said Wednesday, equivalent to 156 billion kroner.

“The market has been characterised by rising interest rates, high inflation, and war in Europe. Equity investments are down with as much as 17 percent. Technology stocks have done particularly poorly with a return of -28 percent,” the CEO of Norges Bank Investment Management, Nicolai Tangen, said in a release.

The fund’s return on equity investments slipped 17%, while fixed income investments and unlisted renewable energy infrastructure were down 9.3% and 13.3%, respectively.

Norway’s vast North Sea oil and gas reserves are the bedrock of the fund’s wealth. Energy was the only sector to not see negative returns after the fund made huge investments in wind power in recent years.

“In the first half of the year, the energy sector returned 13 percent. We have seen sharp price increases for oil, gas, and refined products,” Tangen added.

NBIM’s (Norges Bank Investment Management) performance is “symptomatic” of a larger trend across most major investment funds, Economist Intelligence Unit analyst Matthew Oxenford told CNBC.

“The first half of 2022 saw significant upheaval in financial markets globally, and most diversified funds have seen declines in their value,” Oxenford said.

Market watchers point to Q2 earnings not rolling over as a positive sign fueling the recent rally

“Globally, much of this decline was driven by aggressive monetary tightening by central banks, which led to a sharp decline in investment in fast-growing firms in high-growth sectors such as tech (with Meta being the largest single source of loss in NBIM’s portfolio) as the return on safer investments increased and the global pool of high-risk investment shrinks,” he said.

The loss coincides with the U.S. stock market experiencing its worst first half since the 1970s.

The fund will make it out of the other side of its financial straits though, Oxenford said.

“Given that NBIM is highly diversified, and pursuing a longer-term investment strategy, it is likely to weather this storm, although the exceptionally high growth rates we’ve seen in 2020 and 2021 are unlikely to return as global central bank interest rates aren’t likely to return to the pandemic-era near-zero levels any time soon,” he said.

Inflation, interest rate hikes and war in Europe seriously dented the major U.S. indexes, with the Dow Jones Industrial Average losing more than 15% in the first six months of the year, the S&P 500 down over 20% and the Nasdaq Composite falling almost 30%.

Correction: Norway’s sovereign wealth fund had a loss of 1.68 trillion Norwegian kroner in the first half of 2022. An earlier version misstated the figure.

[waldron] 27/2/2022 20:40

Sunday 27 February 2022 8:01 pm


Norwegian wealth fund to dump all Russian holdings following Ukraine invasion

By: Ilaria Grasso Macola

Norways’ sovereign wealth fund has announced it will dump all of its Russian holdings.


Norway’s $1.3 trillion sovereign wealth fund will drop all its Russian holdings following Russia’s invasion of Ukraine, the prime minister said today.

The fund’s Russian assets consist of shares in 47 companies and government bonds worth $2.83bn, the Oslo government said.

“We have decided to freeze the fund’s investments and have begun the process of selling out,” Prime Minister Jonas Gahr Stoere said during a press conference.

Norway’s decision comes a day after the EU and its allies – including the UK and Canada – said several top Russian banks will be excluded from global banking payment system SWIFT.

The latest set of sanctions is expected to cause turmoil to the Russia’s economy, as it prompted the country’s central bank to plead with citizens for calm, City A.M. reported.

“If I were Russian, I would take my money out now. Bank runs could begin in Russia on Monday,” Bill Ackman, the top US hedge fund manager, said in a tweet.

[sarkasm] 27/1/2022 21:58

Norway’s Oil Fund Booked Second-Best Return Ever In 2021
By Tsvetana Paraskova - Jan 27, 2022, 2:30 PM CST

The world’s largest sovereign wealth fund, Norway’s $1.3-trillion wealth fund, enjoyed last year its second-best return in history, earning the equivalent of $176 billion, driven by technology and financials, while energy stocks globally made the strongest return last year.

The Government Pension Fund Global, as the so-called ‘oil fund’ is officially known, said on Thursday that it returned 14.5 percent, equivalent to $176 billion (1.58 trillion Norwegian crowns) last year. This was the second-best return ever for the world’s biggest sovereign wealth fund, after a record return in 2019.

The fund—created three decades ago to safeguard and manage Norway’s oil wealth for future generations—returned 20.8 percent on its equity investments, thanks to rallying equity markets last year.

“The good results are mainly due to very strong developments in the equity market throughout the year. There was good return in all sectors, but the investments in technology and financials performed particularly well. The investments in technology returned an impressive 30.2 percent”, Nicolai Tangen, CEO of Norges Bank Investment Management which manages the fund, said in a statement.

The fund’s investments in tech giants such as Microsoft, Alphabet, and Apple, contributed the most to absolute return numbers, while Tesla was also among the top ten individual contributions to absolute return, the fund’s presentation showed.

While Norway’s fund enjoyed very good returns last year, Norway itself generated record-high petroleum revenues, thanks to rising commodity prices, growing global demand, and high production from 94 offshore fields, the Norwegian Petroleum Directorate (NPD) said earlier this month.

Going forward, Norway will continue to develop its oil and gas industry under the new minority government led by Labour Party leader Jonas Gahr Stoere.

Norway will continue to grant permits for oil and gas exploration on the Norwegian shelf and will keep the current system of oil auctions, the government says.

By Tsvetana Paraskova for Oilprice.com

[waldron] 14/12/2021 20:11

Norway’s $1.4 Trillion Oil Fund Is Divesting Fast
By Tsvetana Paraskova - Dec 14, 2021, 1:10 PM CST

The world's largest sovereign wealth fund, Norway's $1.4 trillion Government Pension Fund Global (GPFG), is pre-screening companies for sustainability risk before deciding to invest in them and, within one decade, it has divested from 366 firms that it has assessed as lacking sustainable business models.

This year alone, the fund has assessed sustainability risk across more than 400 companies that were added to the fund's index, and chose to refrain from investing in nine companies that it believes will increase the fund's financial risk in the long term, Norges Bank Investment Management said on Tuesday in an update on its actions to protect from risks in the long term.

"In addition to the nine companies that we chose to refrain from investing in, we divested from 43 companies this year that we consider not to have sustainable business models. This includes companies exposed to significant risks related to climate change, water management, and corruption," the fund said in a statement.

The ultimate goal of the fund's pre-screening process and decisions not to invest in certain companies or divest from others is to protect it from risks that could lead to financial losses, Chief Corporate Governance Officer Carine Smith Ihenacho told Bloomberg in an interview.

A Norwegian government panel said in August that the fund should ask oil firms in its portfolio to cut their emissions more drastically. A report from an expert group recommended that the work on climate risk be anchored in the fund's mandate, under which Norges Bank's "responsible investment is based on an overall long-term goal of zero emissions from the companies in which the fund has invested, in line with the Paris Agreement."

Norway is one of Europe's richest countries thanks to the decades of oil revenues amassed by the world's largest sovereign wealth fund with $1.4 trillion in assets and stakes in oil majors Exxon, Chevron, Shell, and BP.

By Tsvetana Paraskova for Oilprice.com

[waldron] 08/4/2021 10:24

Norway’s wealth fund makes renewable energy investment debut with Dutch offshore wind deal

PowerWindOffshore

By Andrew Fawthrop 07 Apr 2021

Norges Bank Investment Management will pay $1.6bn for a 50% stake in Orsted's Borssele 1 & 2, the Netherlands' largest offshore wind project
Orsted Borssele 1 and 2 offshore wind

Borssele 1 & 2 was commissioned at the end of 2020 (Credit: Orsted)

The manager of the world’s largest sovereign wealth fund, Norges Bank Investment Management (NBIM), has made its renewable energy debut, buying a 50% interest in the Orsted Borssele 1 & 2 offshore wind farm.

The investor, which oversees Norway’s trillion-dollar fund, will pay €1.4bn ($1.6bn) for the stake in the 752-megawatt (MW) project located 23km off the coast of Zeeland, Netherlands.

It has been on the lookout for a suitable opportunity to invest in renewable energy assets since approved to do so by Norway’s parliament at the start of last year, and is reported to have looked at several projects before settling on Borssele 1 & 2.

Orsted will remain co-owner and operator of the site, providing long-term operations and maintenance (O&M) services from the Port of Vlissingen.

Borssele 1 & 2 was commissioned in the fourth quarter of 2020, and is the largest operational offshore wind farm in the Netherlands, and the second-largest in the world.

Mie Holstad, chief real assets officer at NBIM, said: “We are excited to have made our first investment in unlisted renewable energy infrastructure and pleased to partner with Orsted as the market leader in offshore wind.

“Borssele 1 & 2 is a high-quality offshore wind asset, and the acquisition is in line with our strategy to build a high-quality portfolio of wind and solar power generation assets.

“The unlisted renewable energy infrastructure strategy supplements our existing unlisted real estate portfolio well, and we draw on our long experience with direct investments.”


NBIM signals growing renewables ambition with Borssele 1 & 2 acquisition from Orsted

NBIM also announced today (7 April) a revised investment strategy for the next two years, saying it will “gradually build up the renewable energy portfolio” of its assets, primarily wind and solar power.

“We will focus on projects with reduced power price risk, stable cash flow and limited risk to the principal investment,” it said in a statement, adding it will prioritise ventures “alongside high-quality partners with proven operational experience”.

The investment manager oversees Norway’s $1.3tn sovereign wealth fund, which has been supplied for years by revenues from the country’s oil and gas industry.

Martin Neubert, chief commercial officer and deputy group CEO at Orsted, said: “As one of the world’s largest institutional investors, Norges Bank Investment Management is making a difference by making sustainable investments.

“We’re delighted to welcome NBIM as partner on Borssele 1 & 2, which is a landmark project for the Netherlands’ transition to renewable energy, and we’re pleased to support NBIM in its strategy to invest in renewable energy infrastructure assets.”

The transaction remains subject to regulatory approvals, and is expected to close in the summer.

[grupo guitarlumber] 18/8/2020 10:10

World’s largest sovereign wealth fund reports $21 billion loss after ‘volatile̵7; first half of the year

Published Tue, Aug 18 20203:22 AM EDT

Updated 2 Hours Ago

Katrina Bishop
@KatrinaBishop

Key Points

“The year started with optimism, but the outlook of the equity market quickly turned when the Corona virus started to spread globally,” Deputy CEO of Norges Bank Investment Management Trond Grande said in a statement.

The fund’s total market value at the end of the six months was 10.4 trillion kroner.

It had 69.6% invested in equities, 27.6% in fixed income and 2.8% in unlisted real estate.



Norway’s huge pension fund — the largest sovereign wealth fund in the world — reported negative returns for the first half of the year on Tuesday, citing “major fluctuations” in equity markets.

The Government Pension Fund Global said it returned -3.4% for the first six months of 2020, equivalent to -188 billion kroner (-$21.3 billion).

“There were major fluctuations in the equity market in this period. The year started with optimism, but the outlook of the equity market quickly turned when the Corona virus started to spread globally,” Deputy CEO of Norges Bank Investment Management Trond Grande said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response.”

The fund’s total market value at the end of the six months was 10.4 trillion kroner, with 69.6% invested in equities, 27.6% in fixed income and 2.8% in unlisted real estate.

Its equity investments fell -6.8% and its real estate returned -1.6% over the first half, although its fixed-income investments rose by 5.1%.

According to the Sovereign Wealth Fund Institute, Norway has the largest wealth fund in the world, when ranked by total assets, followed by the China Investment Corporation and Abu Dhabi Investment Authority.

The fund, which saves revenue from the oil and gas industry, is worth roughly three times Norway’s annual gross domestic product and is pivotal to the Nordic country’s finances.

Norway’s central bank, also known as Norges Bank, said in its half-year report the year began “optimistically,” due in part to expectations of healthy growth in the real economy.

However, as the coronavirus outbreak began to spread worldwide, the bull market ended abruptly, and financial markets were hit by a series of liquidity shocks.

To date, more than 21.8 million people have contracted Covid-19, with 774,160 related deaths across the globe, according to data compiled by Johns Hopkins University.

The Norwegian fund said it saw negative returns in most markets through to the end of June, with North America stocks, which accounts for almost 44% of its equity portfolio, slipping 2.6% over the period.

European stocks returned -11.7% for the first half of 2020 and accounted for 31.6% of the fund’s equities.

Stocks in the Asia-Pacific region returned -4.6% and made up 23% of the fund’s equity investments. Meanwhile, emerging markets returned -7.3% and accounted for 11.5% of the portfolio.

Oil and gas stocks were the worst performers for the first half of the year, with a return of -33.1%. “This was due mainly to a slide in oil prices in the first quarter as a result of both weak demand on account of the pandemic and an increase in supply from Saudi Arabia,” the fund said.

Conversely, tech stocks were the period’s best performers with a positive return of 14.2%. “Strong demand for online solutions for working, education, shopping and entertainment due to the coronavirus pandemic contributed to this strong return,” it added.

Correction: The text of this article has been updated to reflect that the total market value of Norway’s pension fund is 10.4 trillion kroner.

[florenceorbis] 09/6/2020 09:10

Here’s why some sovereign wealth funds could outperform despite the coronavirus crisis
Published Tue, Jun 9 20204:59 AM EDT
Holly Ellyatt
@HollyEllyatt
Key Points

A new report looking at sovereign wealth funds’ investment activity in 2019, carried out by the International Forum of Sovereign Wealth Funds (IFSWF), showed that the number of publicly disclosed direct investments made by such funds has stagnated since 2017.
The amount of equity invested has dropped by over a third from $54.3 billion in 2017 to $35 billion in 2019.
The ISFSWF is a network of sovereign wealth funds from almost 40 countries.

An employee works in the lab that is focused on fighting COVID-19 at Sorrento Therapeutics in San Diego, California on May 22, 2020.
An employee works in the lab that is focused on fighting COVID-19 at Sorrento Therapeutics in San Diego, California on May 22, 2020.
ARIANA DREHSLER

Sovereign wealth fund investments have fallen in the last few years and way before the coronavirus crisis hit, according to a new report, but some are thought to be well-positioned for the economic impact of the pandemic.

A new report looking at sovereign wealth funds’ investment activity in 2019, carried out by the International Forum of Sovereign Wealth Funds (IFSWF), a network of sovereign wealth funds from almost 40 countries, showed that the number of publicly disclosed direct investments made by such funds has stagnated since 2017, while the amount of equity invested has dropped by over one-third to $35 billion in 2019, down from $54.3 billion in 2017.

“Sovereign wealth funds, as long-term investors looking for value, have really struggled, particularly in private markets in taking direct stakes, in 2019 and even beginning of 2020. High valuations in the private equity markets, increasingly illiquid stock markets and a really difficult IPO (initial public offering) environment last year made it difficult for them to double down on their investments, so we did see a slowing of direct investments last year and that was before Covid hit,” Victoria Barbary, director of strategy and communications, International Forum of Sovereign Wealth Funds, told CNBC Tuesday.

The report also highlighted that the challenging investment climate prompted sovereign wealth funds to look for opportunities in sectors such as enterprise software and services and biotechnology, which have proved more resilient to the Covid-19 crisis, “while their interest in sectors such as industrials and financial services, that have been hard-hit by the crisis, waned.”

The coronavirus, which was first detected in Wuhan, China late last year, has brought large swathes of global economic activity to a standstill amid lockdowns to stop the spread of the virus.

Stock markets initially plummeted as the virus took hold, but massive central bank stimulus packages have given a big boost to investors and markets have regained lost ground. On Monday, for example, the S&P 500 index returned to positive territory for 2020 as fears over the coronavirus gave way to positive momentum surrounding the reopening of the American economy.
International Forum of Sovereign Wealth Funds (IFSWF)

What’s more, some of the investments made recently by certain sovereign wealth funds — state-owned investment vehicles that use surplus revenue (such as money made from a nation’s oil and gas reserves) to invest in a variety of assets, usually on a long-term basis — have been shrewd and resilient investments during, and due to, the pandemic.

“A lot of sovereign wealth funds have been, and we continue to see this this year, have been investing in sectors like biotechnology, like software and digital services, that have actually done comparatively very well during this period,” Barbary told CNBC’s “Squawk Box Europe.”

“Obviously looking for vaccines, with biotech, and all of these technologies that enable me to talkl to you from home, that enable us to work from home, have also done relatively well and those were things that sovereign wealth funds were doing quite a lot of investment in, in 2019.”

For example, the report highlighted that $3 billion of sovereign wealth fund investment had gone into software and digital services, up from $2 billion the previous year; “We would expect to see those funds that have really looked at these segments to do pretty well,” she said.

More sovereign wealth funds were looking at companies and assets where they see value over time, “they are looking at stronger IP (intellectual property) rather than this consumer e-commerce that we saw five years ago,” Barbary said

The IWSWF report continued on that note that “high valuations for mature private companies have encouraged those sovereign wealth funds with established private-equity programmes to look for earlier-stage investments, since 2017 particularly, in sectors like healthcare and technology, where more companies are looking for capital and sovereign wealth funds perceive there may be more value.”

“Naturally, as sovereign wealth funds invest at the earlier stage of companies’ lifecycle, they have to reduce the size of cheque they write, reducing the average investment value we have recorded. Equally, high valuations in private markets has also encouraged some sovereign wealth funds to sell investments in assets such as core real estate in major cities and infrastructure, believing the prices of some assets had peaked.”

[waldron] 22/5/2020 04:59

Sovereign wealth funds will play a bigger role in markets post-coronavirus, Turkey fund chief says

Published Fri, May 22 202012:47 AM EDT

Natasha Turak
@NatashaTurak

Key Points

Turkey’s parliament in late April approved a bill allowing the Turkish Wealth Fund to buy or become a partner in distressed companies hit by the coronavirus outbreak.

The fund’s chief executive, Zafer Sonmez, believes this will prevent capital outflow from the companies and enable the fund to acquire controlling stakes in strategic firms.

“In my view, in the next three to five years, sovereign-owned entities and sovereign funds will play an important role in the equity part of the game,” Sonmez told CNBC.

[adrian j boris] 12/5/2020 07:09

News Wire
Investing

33m ago

Norway Plans to Spend Record $41 Billion of Oil Wealth in Crisis

Mikael Holter, Bloomberg News








(Bloomberg) -- Norway plans to spend a record 420 billion kroner ($41 billion) of its oil wealth to weather the brutal Covid-19 downturn.

The richest Nordic economy and western Europe’s biggest oil and gas producer has been hit on two fronts as the coronavirus pandemic shut down mainland activity and led to a collapse in the global crude market. The Norwegian government now expects mainland gross domestic product to drop 4% this year, according to key figures from the government’s revised budget due later on Tuesday.

Norway has amassed a $1 trillion sovereign wealth fund from decades of petroleum production that gives it tremendous fiscal fire power. The so-called structural oil-corrected deficit will represent 4.2% of the fund’s value this year, exceeding the country’s 3% fiscal rule.

Read: Historic Asset Sale at $1 Trillion Fund Gives Norway an Edge

When oil-money spending exceeds the state’s income from petroleum activities, the government makes withdrawals from the fund. While that happened during the previous oil downturn, 2020 will be the first year where outflows surpass the fund’s own cash flow from dividends and interest payments, forcing it to offload assets. The withdrawal amount will be included in the spending plan due at 10:45 a.m. in Oslo.

Key Figures

The government said in April it expected emergency measures -- from compensating businesses for lost revenue to guaranteeing loans and boosting unemployment benefits -- will weaken this year’s budget by 201 billion kroner compared to the original plan presented in October, but that estimate has grown since then.

The changes since last year are striking. The Conservative-led government was aiming for a slight reduction in oil spending to 244 billion kroner, representing a negative fiscal impulse of 0.2 percentage point. That figure, measured as the increase in the structural oil-corrected deficit divided by trend GDP, is now set to jump to a positive 5.1 percentage points.

Norway is now gradually opening up society, restarting schools and lifting restrictions on many businesses as the contagion comes under control. But the export and oil-dependent nation is also bracing for the longer-term consequences of a global downturn.

Parallel to the government’s response, Norway’s central bank has slashed the key policy rate by 1.5 percentage points to an unprecedented 0% over three cuts starting in March. It’s also intervened to support the weak krone and provided cheap liquidity to banks.