Norway’s sovereign wealth fund loses $21bn in first half

Norway’s sovereign wealth fund, the world’s biggest, lost 188 billion kroner ($21bn) in the first half of the year as the global economy reels from the coronavirus pandemic, according to the country’s central bank.

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, the central bank said on Tuesday.

At the end of June, the fund was valued at 10.4 trillion kroner ($1.17 trillion), up from the 9.98 trillion kroner ($1.05 trillion) 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 said.

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.

‘Considerable uncertainty’

“Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty,” Grande said.

Meanwhile, the fund is 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 1, 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 been criticised for irregularities in the recruitment process.

As a result, some important political parties are opposed to Tangen’s appointment, and it remains up in the air.