New Norway gov to steer oil fund to new markets

Norway's incoming government has pledged to draw up a new investment strategy for the country's vast $720bn sovereign wealth fund, increasing its investments in emerging markets, sustainable companies and renewable energy.

New Norway gov to steer oil fund to new markets
Re-Define Europe MD Sony Kapoor - OECD
"The government will establish a program of investment in the fund…aiming to invest in sustainable companies and projects in developing countries and emerging markets," the new government wrote in a 70-page political platform document published on Monday.  
"The government will also consider establishing a separate mandate for renewable energy." 
Norway's Government Pension Fund — commonly referred to as the Oil Fund — was launched in 1998 to channel the country's oil revenues into a vast investment fund, which is intended to provide the country with a perpetual income. 
The decision to change the fund's investment strategy was welcomed by Sony Kapoor, the Managing Director of the Re-Define Europe think-tank, which proposed very similar changes in a report earlier this year. 
“It is a signal that the limitations of the previous strategy of investing mainly in OECD countries have been recognised, and change will now go in the right direction,” he told the FT newspaper. “Change will probably be slow, but it is a first step.”
The new strategy closely matches the proposals of a report  issued earlier this year by the think-tank Re-Define Europe, which criticised the "sclerotic" 3.17 percent return the fund has achieved since it was launched in 1998, arguing that this was a consequence of the decision to invest in "slow-growing mature economies". 
The Progress Party does not however appear to have won the backing of its coalition partner for its proposal to loosen the four percent rule governing how much of Norway's oil money can go on government spending. 

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Norway oil fund loses 18 billion euros in first half of 2020

Norway's huge sovereign wealth fund, the world's biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday.

Norway oil fund loses 18 billion euros in first half of 2020
Unusually empty slopes and ski lifts in Hemsedal in April. Photo: AFP

The fund, in which the Norwegian state's oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6 percent of its investments.

Its share portfolio posted a negative return of 6.8 percent in the first six 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 first 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 first quarter was limited by a massive monetary and financial policy response,” he added.

Real estate investments, which represent 2.8 percent of the portfolio, also posted a negative return, of 1.6 percent, while bond investments, which account for 27.6 percent of assets, posted a gain of 5.1 percent.

“Even though markets recovered well in the second 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 1st, 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 criticised 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.

READ ALSO: Norway's oil fund loses 1.3 trillion kroner ($125bn) in coronavirus crash