Norway’s Huge Oil Fund posts NOK 188 billion first-half loss

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Comserve Inc.

Aug 25, 2020, 08:00 EST

Bronx, United States, Aug 25, 2020, 08:00 /Comserve / -- The Government Pension Fund Global of Norway reported losses worth NOK 188 billion with a -3.4% return on fund in the first half of 2020.

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Oslo, Norway, 20, Aug 2020- The Government Pension Fund Global of Norway reported losses worth NOK 188 billion with a -3.4% return on fund in the first half of 2020. This fund which is touted to be the world’s largest sovereign wealth fund posted these losses for the first half of 2020 due to the fluctuations it faced in the equity market.

The fund’s investments returns were 0.11 percentage points lower than the benchmark index return against which the fund is measured. According to the investments made by the fund, most of it has been in equities. It had invested 69.6% in equities, 27.6% in fixed income and 2.8% in unlisted real estate. This oil fund’s equity investments returned -6.8% with the Fixed-income investments returning 5.1%. Further, the unlisted real estate generated returned at -1.6%. The report further stated about the market value of the fund at the end of the first half of 2020 which was NOK 10,400 billion. Its value as of 19, Aug 2020 is NOK 10,240 billion which is further lower than that when the report was prepared. The annual return on this fund has been 5.8% between the period 1, Jan 1998 and the first half of 2020.

The report released by the Government Pension Global Fund stated that how the year 2020 began optimistically and how the coronavirus (COVID-19) pandemic brought an abrupt end to the share market. With the widespread of the disease, the financial market started facing a series of liquidity shocks because of an increase in demand for cash, both among investors as well as in the economy. It registered negative returns on most of the markets. North American stocks which amount to 43.7% of its equity portfolio returned -2.6%. Asia-Pacific region amounting to 23.0% of the fund’s equity investments, returned-4.6% and the European market returned -11.7% which accounts for 31.6% of the fund’s equity investments. The last market being the Emerging markets with 11.5% of the equity portfolio returned -7.3%. Only the technology companies fared better in this first half with a positive return of 14.2%, which was only due to the heavy demand for online shopping, working from home, online solutions and online sources of entertainment. This happened because of the stringent restrictions which demanded people to not wander outside and just stay at home. The oil companies fared the worst with -33.1% return due to the high production of oil in Saudi Arabia combined with the COVID-19 pandemic.

This oil fund began as a result of the oil discovered in the North Sea in 1969 after which the parliament adopted the Government Pension Fund Act in 1990. The fund has been on an upward growth trajectory since then and reached a value of NOK 10,000 billion on 25, Oct 2019.

About the Government Pension Global Fund

Established in 1990, Government Pension Fund Global is a Norwegian oil fund. It was made to ensure long-term management of the revenue that’ll come from Norway’s oil and gas resources in the North Sea. The goal was to use this fund to benefit the current and future generations with the wealth benefits from this fund. It was set up as it will work as a shield to protect the economy from ups and downs that the oil sector faces. By now it has invested in about 74 countries and more than 9000 companies all around the globe.

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