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Norway sovereign wealth fund loses $239 billion in first half of 2022

OSLO (REUTERS) – Norway’s sovereign wealth fund, the world’s largest, made a loss of 1.68 trillion Norwegian krone (S$239 billion) in the first half of 2022, it said on Wednesday (Aug 17), as stocks and bonds were hit by global recession fears and rampant price inflation.

The US$1.3 trillion (S$1.79 trillion) fund’s return on investment was a negative 14.4 per cent for the January-June period, although that was 1.14 percentage points ahead of the return on its benchmark index.

“The market has been characterised by rising interest rates, high inflation and war in Europe,” said Mr Nicolai Tangen, chief executive of Norges Bank Investment Management, which operates the fund, in a statement.

“Technology stocks have done particularly poorly with a return of minus 28 per cent,” he said.

Founded in 1996, the fund invests revenue from Norway’s oil and gas sector, and holds stakes in more than 9,300 companies globally, owning 1.3 per cent of all listed stocks.

Its US$1.3 trillion valuation approximately equates to the size of the Mexican economy, the world’s 16th-largest, according to some measures.

All sectors in which the fund invests recorded negative returns in the first half, apart from energy, where returns were 13 per cent as prices soared following Russia’s invasion of Ukraine.

Central banks have hiked interest rates aggressively this year to combat inflation, leading to increased borrowing costs and lowered profit margins for corporations.

The tech-heavy Nasdaq Composite and the broader S&P 500 index saw their biggest January-June declines since the financial crisis, while United States and European government bond markets had their worst start to any year in decades.

In total, 68.5 per cent of the Norwegian fund was invested in equities at the end of June, with 28.3 per cent in fixed income, 3.0 per cent in unlisted real estate, and 0.1 per cent in unlisted renewable energy infrastructure.