The Norwegian Government Global Pension Fund, the largest sovereign wealth fund in the world, posted a profit of 1.5 trillion Norwegian crowns (the equivalent of 130,782 million euros) during the first half of 2023, after record losses of 1.68 trillion crowns (146,450 million euros) in the same period of 2022. The improvement in business is driven by the good performance of equities, particularly in the case of AI-related technology companies.
The Norwegian fund, which invests oil and gas revenues abroad and is managed by Norges Bank Investment Management (NBIM), an entity attached to the Norwegian central bank, was worth 15.299 trillion crowns (1.33 trillion euros) at the end of last June.
In its mid-year report, the Norwegian fund explains that last January it invested some 600 million euros, the equivalent of 6.4 billion crowns, in the acquisition of 49% of a portfolio of wind and solar plants in Spain. In addition, Norges Bank reports that it has reduced its exposure to Spanish sovereign debt. Until now, Spain was one of the 10 countries with the greatest exposure. A year ago it maintained an investment in the Spanish public debt of about 3,500 million (40,276 million Norwegian crowns). At the end of last year it reduced its investment in Spanish Treasury bonds to an amount of 2,800 million euros (31,959 million crowns) . While at the end of the first half of this year it had reduced its exposure to 2,350 million (27,124 million).
The profitability of the Norwegian fund’s investments reached 10%, thanks to the return of 13.7% achieved in the entity’s variable income portfolio, which represented 71.3% of the exposure of the investment vehicle of Norway. For its part, the fixed-income portfolio, which accounts for 26.4% of the fund’s exposure, offered a return of 2.2% during the semester, while unlisted real estate investments, 2.3% of the portfolio, reported a return of -4.6%. Likewise, investments in renewable infrastructures, which represent 0.1% of the total fund, registered a return of -6.5%.
“The stock market has been very strong in the first half of the year, after a weak year in 2022. Especially technology stocks have seen significant growth, largely driven by increased demand for new solutions in artificial intelligence,” said the CEO of the investment manager of Norges Bank (NBIM), Nicolai Tangen.
The entity highlighted that technology companies generated the strongest return for the fund, with an average revaluation of 38.6% after a bad year in 2022, thanks to strong demand for new artificial intelligence solutions from the largest companies in the world. software and the internet and their semiconductor suppliers. In this sense, the Norwegian fund highlighted its strong commitment to the technology sector, which accounted for eight of the ten largest investments in vehicle companies, with Apple, Microsoft, Alphabet, Amazon and Nvidia as the five companies with the greatest weight.
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