Norway’s huge sovereign wealth fund, the world’s biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the 1st half of the year as the global economy reels from the COVID-19 pandemic, the central bank said on Tuesday, August 18.
The fund, in which the Norwegian state’s oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6% of its investments.
Its share portfolio posted a negative return of 6.8% in the first 6 months of the year.
At the end of June, the fund was valued at 10.4 trillion kroner (989 billion euros), up from the 9.98 trillion kroner seen at the end of the 1st quarter.
“The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” the fund’s deputy chief executive, Trond Grande, said in a statement.
“However, the sharp stock market decline of the 1st quarter was limited by a massive monetary and financial policy response,” he added.
Real estate investments, which represent 2.8% of the portfolio, also posted a negative return, of 1.6%, while bond investments, which account for 27.6% of assets, posted a gain of 5.1%.
“Even though markets recovered well in the 2nd quarter, we are still witnessing considerable uncertainty,” Grande said.
The fund is meanwhile still mired in controversy over the appointment of a new chief executive.
Nicolai Tangen, a billionaire who founded the AKO Capital hedge fund in London, is due to take over the fund on September 1, replacing Yngve Slyngstad who is retiring.
But critics have complained about Tangen’s possible conflicts of interest, as well as his use of tax havens.
The central bank has meanwhile been criticized for irregularities in the recruitment process.
As a result, some major political parties are opposed to Tangen’s appointment, and it remains up in the air. – Rappler.com
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