2024-08-14 11:21:00
The Norwegian sovereign wealth fund has broken a new record. Despite lower returns than in 2023, the world’s largest fund (by capitalization) generated 1,478 billion kroner, or 168 billion euros, in the first half of 2024, which is equivalent to Morocco’s GDP last year, if we rely on data from the World Bank.
« The results were mainly driven by technology stocks due to increased demand for new artificial intelligence solutions. », explained Nicolai Tangen, CEO of Norges Bank Investment Management, this Wednesday.
As of June 30, 2024, the fund is valued at €1,530 billion and has returned around 8.6% over the past six months. Equity investment returns were extremely high in the first half of the year », whose CEO said he was satisfied with a total valuation very close to the Spanish GDP, according to the World Bank.
The fund holds an average of 1.5% of all listed companies
The sovereign fund controls more than 1% of the total market value and its historic windfall comes from the Norwegian state’s oil and gas industry. He receives all the profits Norway generates through the industry, which is 16 billion euros this semester alone. The fund’s purpose is to grow revenues in order to finance future spending in the Scandinavian country.
Specifically, 72% of investments were made in equities, which returned 12% in the first half of the year, slightly lower than the first half of last year (13.6%). However, there is evidence that the first six months of this year were generally worse than in 2023: unlisted renewable energy infrastructure returned -18%, while Real estate investment fell 1% during the same period.
However, the last three assets have a much lower weight than the stocks in the Norwegian giant’s portfolio, which made it possible to limit losses. The fund was particularly shaken by the depreciation of the yen and changes in Japan’s monetary policy, with its Japan portfolio losing 13.3%.
On average, the sovereign wealth fund owns 1.5% of all listed companies worldwide, with small stakes in nearly 9,000 companies, most notably Apple, Nestle, Microsoft and Samsung.
In the first half of this year, driven by the boom in artificial intelligence, technology stocks once again took on an increasingly large position. Dividends paid by these companies to sovereign wealth funds doubled in six months. On the steps of the podium, we find: Microsoft, Apple and Nvidia, in which the Norwegian sovereign fund holds only 1.1% of the shares.
Greater transparency
“We are already the most transparent fund in the world, but we are going even further. From now on, everyone will be able to find an updated overview of all our investments every six months,” said CEO Nicolai Tangen.
exist Sovereign Wealth Fund Websitethere are already countless tables listing thousands of corporate investments, real estate investments, etc. Since 2004, the fund has been subject to very strict and numerous ethical rules, prohibiting certain investments and requiring transparency in the investments made. As a result, since then it has divested itself from numerous companies involved in anti-personnel mines, tobacco, and the manufacture of nuclear weapons, forcing the sovereign fund to divest itself from the French Safran Group in 2006.
During 2024, the fund announced that it would not join the campaign of NGOs for an economic boycott of Israel. As a result, he retained his investments in 77 Israeli companies, including the most powerful pharmaceutical group, Teva, in which he holds a 3% stake. The latter, a world leader in generic drugs, is accused of having a production plant in the Israeli colony of Balkan in the occupied West Bank.
Over the past few years, especially after the October 7 attacks and Israel’s response in Gaza, sovereign funds such as those of Ireland and New Zealand have gradually disengaged from banks and supermarkets operating in the occupied Palestinian territories.
An increasingly determined fund
Since 2021, the fund has also been working to increase the number of women on corporate boards, which will be directly related to better governance. In the spring of 2023, he even announced that he would vote against the appointment of only men on the boards of companies in Japan where he has a large number of investments.
« This year we said[to companies]‘If you don’t have a woman on the board, we’re going to vote against you.’ Next year we’re going to do that more aggressively.”Carine Smith Ihenacho, the fund’s head of governance and compliance, told Reuters in an August 2023 interview.
There is a similar commitment to wage inequality and redistribution. Karin Smith Iheanacho says to herself Worried: “The salaries of the big guys are getting higher and higher. According to the data we have seen, the salary increase of the big guys exceeds the median salary and also exceeds inflation. ».
In votes on increasing CEO pay, the fund voted unhesitatingly against one in ten, notably against Coca-Cola’s James Quincey, Apple’s Tim Cook and PepsiCo’s Ramon Laguarta.
Finally, despite being driven by the Norwegian state’s oil and gas revenues, the sovereign fund has made climate issues one of its passions. It demands this of the companies it invests in. As a result, the fund has started investing in renewable energy projects that are not yet listed on the stock exchange, a very marginal sector, and it gained 3.7% last year.
However, the fund’s president, Nicolai Tangen, told CNBC in an interview in April that He once claimed that Few projects (in green investment, editor’s note) have high competition, high prices and low returns – but we think this situation is improving from last year ».
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