Norway’s sovereign wealth fund, the world’s largest, shrank by about 1.68 trillion kronor ($173.2 billion) in the first half of the year, weighed down by tech stocks, Norway’s central bank said on Wednesday.
The fund, in which the state invests its oil earnings, posted a negative return of 14.4 percent for the first six months of the year, with its total value falling to 11.65 trillion kroner ($1.20 trillion) at the end of June.
“In percentage terms, it’s the second-largest drop for half-year earnings” since the fund’s inception in 1996, “and the largest drop in kroons,” said the fund’s head, Nicolai Tangen, in a presentation.
Since the beginning of the year, the markets have been rocked by rising interest rates and high inflation, in particular due to soaring energy prices and the war in Ukraine, which are fueling everyone’s fears of a recession.
The fund was weighed down primarily by its stock holdings, which fell by 17 percent.
Technology stocks performed particularly poorly over the period, falling 28 percent as the end of restrictions related to the Covid-19 pandemic dragged giants like Meta, the parent company of Facebook, Amazon, Apple and Microsoft, into the abyss.
Energy was the only sector where the Fund posted positive performance, with those stocks gaining 13 percent.
Equities made up 68.5 percent of the portfolio at the end of June.
The fund holds stakes in around 9,300 companies and controls around 1.3 percent of the global market capitalization.
The value of its bond investments, which accounted for 28.3 percent of assets, shrank 9.3 percent, while its unlisted real estate holdings, which accounted for 3 percent of the portfolio, rose 7.1 percent.
The fund’s placements in unlisted renewable energy projects — which accounted for just 0.1 percent of its investments — also fell 13.3 percent.
All of the fund’s investments are made outside of Norway, Western Europe’s largest oil and gas exporter, to prevent the Norwegian economy from overheating.
While the fund – which aims to finance the future needs of Norway’s generous welfare state – lost money in the first half of this year, rising share prices helped it recover early in the second half.
On Wednesday, the fund was valued at 12.3 trillion kroner ($1.26 trillion), according to a counter on the central bank’s website.
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