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Norway’s sovereign fund eyes long-term profit from market turmoil
Global Banking & Finance Review®
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By Victoria Klesty
OSLO (Reuters) – The recent turmoil in global financial markets represents an opportunity for Norway’s $1.2 trillion sovereign wealth fund, to profit from it much like it did during the 2008-2009 financial crisis, its deputy chief said on Tuesday.
As the world’s largest fund of its kind it owns 1.3% of all globally listed stocks as well as a portfolio of bonds, real estate and renewable projects, aiming to share the proceeds from Norway’s oil and gas industry with future generations.
“The fund is the investor that is best suited in the world to withstand this type of turbulence that we now face,” Trond Grande, deputy chief executive of Norges Bank Investment Management, told a conference in Oslo.
Grande said the current situation, with stock market indices heading south, created a sense of “deja vu”, reminding of the time of Lehman Brothers’ collapse in 2008, after which the wealth fund went on a buying spree.
“Uncertainty and crises create opportunities … And then you have to grab those opportunities when they come,” he said.
Norway now earns record amounts thanks to high oil and gas prices, and the government in its spring budget last month said it planned to transfer 630 billion crowns ($64 billion) to the fund this year for new investments.
The fund’s management has warned that a stock market crash could wipe out 40% of its value.
However, the benefit of investing for the long run is well understood by policy makers in parliament and the government, Grande said.
The S&P 500 fell by almost 6% last week to trade 24% below its January high. Analysts at BofA noted this was the 20th bear market in the past 140 years.
Founded in 1996, the fund owns shares in some 9,300 companies globally.
($1 = 9.8007 Norwegian crowns)
(Reporting by Victoria Klesty, editing by Terje Solsvik and Tomasz Janowski)
A sovereign wealth fund is a state-owned investment fund that invests in various assets, including stocks, bonds, real estate, and other financial instruments, to generate long-term returns for the country's economy.
Market turmoil refers to periods of significant volatility in financial markets, often characterized by sharp declines in stock prices, increased trading volumes, and heightened uncertainty among investors.
A bear market is a market condition where prices of securities fall by 20% or more from recent highs, typically accompanied by widespread pessimism and negative investor sentiment.
Long-term investing involves holding investments for an extended period, usually years, to achieve significant growth and returns, often focusing on fundamentals rather than short-term market fluctuations.
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