Published by Global Banking & Finance Review®
Posted on August 12, 2025
3 min readLast updated: January 22, 2026
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Norway's sovereign fund plans to divest more Israeli stocks due to the Gaza and West Bank crisis, impacting its investment strategy and ethical considerations.
By Gwladys Fouche
ARENDAL, Norway (Reuters) -Norway's $2 trillion sovereign wealth fund, the world's largest, said on Tuesday it expects to divest from more Israeli companies as part of its ongoing review of investments in the country over the situation in Gaza and the West Bank.
The fund announced on Monday it was terminating contracts with external asset managers handling some of its Israeli investments and has divested parts of its portfolio in the country over the worsening humanitarian crisis in Gaza.
The review began last week following media reports that the fund had built a stake of just over 2% in an Israeli jet engine group that provides services to Israel's armed forces, including the maintenance of fighter jets.
The stake in the company, Bet Shemesh Engines Ltd (BSEL), has now been sold, the fund announced on Tuesday.
Bet Shemesh did not respond to requests for comment.
Norges Bank Investment Management (NBIM), an arm of Norway's central bank, which held stakes in 61 Israeli companies as of June 30, in recent days divested stakes in 11 firms, including BSEL. It did not name the other companies.
"We expect to divest from more companies, NBIM CEO Nicolai Tangen told a press conference on Tuesday.
The fund began investing in BSEL in November 2023, about one month after the war in Gaza began, via an external investment manager, Tangen said. The fund declined to name the external portfolio manager.
Since then, NBIM has held quarterly meetings with Bet Shemesh Holdings, but the war in Gaza was not raised as a theme.
"We had discussions about their business in the United States, not about the war in Gaza," Tangen said, adding that the fund had rated BSEL as a "medium risk" stock with regards to ethics concerns.
BSEL was later reviewed as a high-risk stock in May. That change should have been quicker, Tangen said, adding that NBIM should have had a tighter overview of these investments earlier.
"We should have been quicker in taking back control of the Israeli investments," he said.
SIX-MONTH PROFIT
The fund, which invests the Norwegian state's revenues from oil and gas production, is one of the world's largest investors, owning on average 1.5% of all listed stocks worldwide. It also invests in bonds, real estate and renewable energy projects.
On Tuesday, it posted a 698 billion Norwegian crowns ($68.28 billion) profit for the first half of the year, earning an overall return of 5.7% in line with its benchmark index.
"The result is driven by good returns in the stock market, particularly in the financial sector," Tangen said in a statement.
($1 = 10.2223 Norwegian crowns)
(Reporting by Gwladys Fouche, editing by Terje Solsvik and Sharon Singleton)
Norway's sovereign wealth fund expects to divest from more Israeli companies as part of its ongoing review of investments, having already divested stakes in 11 firms.
The review began following media reports about the fund's stake in an Israeli jet engine group that provides services to Israel's armed forces amid the worsening situation in Gaza.
The fund posted a profit of 698 billion Norwegian crowns ($68.28 billion) for the first half of the year, achieving an overall return of 5.7%.
The fund rated Bet Shemesh Engines as a 'medium risk' stock regarding ethics concerns, which was later changed to high risk in May due to the ongoing conflict.
Norges Bank Investment Management terminated contracts with external asset managers and divested parts of its portfolio in Israel, including selling its stake in Bet Shemesh Engines.
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