Norway wealth fund posts record $213 bln profit, driven by tech stocks

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OSLO, Jan 30 (Reuters) – Norway’s $1.6 trillion sovereign wealth fund, the world’s largest, reported on Tuesday a record profit of 2.22 trillion crowns ($213 billion) in 2023, driven by strong returns on its investments in technology stocks.

The results compared with a record loss in 2022 of 1.64 trillion crowns, when tech stocks fell.

“2023 ended a lot better than expected,” NBIM CEO Nicolai Tangen told a press conference.

Tech stocks contributed half of the fund’s return, driven by a business breakthrough for artificial intelligence, an improvement in the general economic outlook and expectations for lower interest rates, the fund said.

The fund’s most valuable company stakes were in Microsoft (MSFT.O), Apple (AAPL.O), and Nvidia (NVDA.O). The most valuable non-tech stock was pharmaceutical company Novo Nordisk (NOVOb.CO), in eighth place.

The fund’s return on investment in 2023 stood at 16.1% for the year, 0.18 percentage point lower than the return on its benchmark index.

Reuters Graphics Reuters Graphics

Reuters Graphics

Earlier this month, Tangen warned that inflation would remain persistent worldwide and would come down “more slowly than I think is generally expected”.

On Tuesday, he told Reuters the disruption to global trade due to the tensions in the Red Sea would have some effect on inflation but that he expected it would be “relatively limited”.

More widely, the risk of the war in Gaza expanding into a regional conflict was “one of many risks that we are looking at”, he said in an interview after the results presentation.

“The effect of a wider war would be mainly impacting through higher energy prices,” he said.

Separately, the fund’s deputy CEO said on Tuesday the crisis at Chinese property giant China Evergrande Group (3333.HK), had long been expected. The fund itself had divested from China Evergrande as far back as 2021, fund data showed.

HIGH INFLOWS

Inflows from the Norwegian state into the fund in 2023 were 711 billion crowns, the second largest in the fund’s history, short of a record set in 2022 of nearly 1.1 trillion crowns.

Norway is a major crude oil exporter and Europe’s largest gas supplier after a drop in Russian gas flows in 2022, and has benefited from higher energy prices due to the war in Ukraine.

The return on equity investments was 21.3% last year, fixed income investments gained 6.1%, unlisted real estate returned -12.4% and unlisted renewable energy infrastructure 3.7%, NBIM said.

At the end of the year, 70.9% of the fund’s assets were allocated to equities, up from 69.8% in 2022, bonds declined to 27.1% from 27.5%, unlisted real estate fell to 1.9% from 2.7% and renewable infrastructure held steady at 0.1% of investments.

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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