After the Norwegian sovereign wealth fund showed a strong performance in the first half of the year, it again posted losses in the third quarter.
• Norwegian sovereign wealth fund in 2022 with a loss
• Profitable in the first half of 2023
• Third quarter weaker again
The Norwegian sovereign wealth fund, officially the Government Pension Fund Global, aims to “ensure responsible and long-term management of revenues from Norway’s oil and gas resources, so that this wealth benefits both current and future generations.” The fund invests in more than 9,200 companies in 70 countries. The majority of the fund is invested in stocks, as stated on the Norges Bank Investment Management website. The fund also invests in bonds and real estate and infrastructure for renewable energies.
First half of 2023: profit after a loss-making year in 2022
After a loss of 1.637 trillion crowns (about 146 billion US dollars) in the previous year, against the background of rising interest rates, high inflation and the Russian war of aggression against Ukraine, the Norwegian sovereign wealth fund, the largest sovereign wealth fund in the world, was able to record a loss in the first half of 2023 Generate a profit of 1.501 trillion crowns. The return was 10 percent and the value of the Government Pension Fund Global rose to 15.299 trillion crowns (around 1.4 trillion US dollars) by the end of June.
The fund particularly benefited from a strong stock market. Stock investments achieved a return of 13.7 percent in the first half of the year. The technology, consumer discretionary and industrial sectors were particularly strong, while the energy sector delivered the weakest return. Among stocks, technology companies performed particularly well with a return of 38.6 percent. “The sector benefited from strong demand for new AI solutions from the largest internet and software companies and their semiconductor suppliers,” said the first half report.
3rd quarter: losses across the board
However, a different picture emerged in the third quarter. As CNBC reports, the Norwegian sovereign wealth fund lost 374 billion Norwegian crowns (around 34 billion US dollars) in the past quarter. The return was minus 2.1 percent – but still 0.17 percentage points above the return of the fund’s reference index.
After the Government Pension Fund Global was able to benefit from the strong stock markets in the first half of the year, it also suffered from weak performance in the third quarter. “The stock market had a weaker quarter compared to the previous two quarters,” CNBC quoted Trond Grande, deputy CEO of Norges Bank Investment Management, as saying. “In particular, the technology, industrials and consumer discretionary sectors contributed negatively to returns.” At the end of June, the Norwegian sovereign wealth fund had invested 70.6 percent in stocks, according to CNBC, slightly less than in the previous quarter.
The fund suffered a loss of 3.3 percent on its investments in unlisted real estate in the third quarter. The loss in investments in the infrastructure for renewable energies was 2.4 percent.
It remains to be seen how the fourth quarter develops and what the balance sheet looks like at the end of the year.
Editorial team finanzen.net