Norway's wealth fund flags sovereign debt risk to stock markets
Countries are not doing enough to lower debt, fund CEO says
Fund returns 8.6% in the first half of year
Says result driven by 'fragile' technology stocks
Recasts with interview with CEO, deputy CEO, in paragraphs 1, 4-10, 18
By Gwladys Fouche
ARENDAL, Norway, Aug 14 (Reuters) -Countries around the world are not doing enough to reduce their debts and this poses a risk to the stability of already uncertain financial markets, the CEO of Norway's $1.7 trillion wealth fund said on Wednesday.
The fund, which invests the Norwegian state's revenues from oil and gas production, is one of the world's largest investors, owning on average 1.5% of all listed stocks worldwide. It also invests in bonds, real estate and renewable energy projects.
The fund posted on Wednesday a profit of 1.48 trillion crowns ($138 billion) in the first half of the year as global stock markets rose.
But fund CEO Nicolai Tangen told a news conference such good results were unlikely to continue given "more risks to stocks markets now than there were before". One of them comes from the level of sovereign debt worldwide, he said.
"We are worried about it because it's at a level we haven't seen (before), it is continuing to increase, and there seems to be very little willingness anywhere in the world to actively try to reduce it," he later told Reuters.
Tangen declined to name any specific nations at risk, but said the problem affected "most of the countries and many of the big countries too" and would make financial markets "less robust".
Although he did not expect "a crash around the corner," a crisis could happen suddenly, Tangen said, citing Britain's 2022 market plunge after the government of then-prime minister Liz Truss presented a fiscal budget markets assessed as unsustainable.
"You don't know the timing, you don't know what's going to trigger it. But suddenly, for whatever reason, you (the markets) lose a bit of faith," he said.
Asked whether the fund could try to reduce the risk, Tangen said there were "limited steps we can take because if we did it would impact the whole financial system".
One thing it can and is doing is highlighting the risk to its owner, the Norwegian state, deputy CEO Trond Grande told Reuters.
TECH STOCKS
In the first half of this year, the fund's equity portfolio saw a return of 12.5% from January to June, while its fixed income and real estate assets incurred losses of 0.6% and 0.5% respectively.
"The result was mainly driven by the large technology stocks and the increased demand for new solutions in artificial intelligence," Tangen told the news conference.
The fund's performance is highly dependent on the performance of the tech sector, with 26% of the fund's equity investments in tech - up from 21% at the same time last year. Nine out of the ten biggest equity holdings in the fund are tech companies, including Microsoft MSFT.O Apple AAPL.O and NVIDIA NVDA.O.
Tangen described these companies as fragile in that they depend on one another for their growth. Taiwan's TSMC 2330.TW, for instance, provides chips for NVIDIA to develop that are in turn used by Microsoft and Amazon AMZN.O to develop their AI products.
To lessen the risk, the fund last year reduced its holdings in tech companies, taking them below the level allowed under the rules of the fund's benchmark index, but Tangen said there were no plans for further cuts.
"We feel pretty good with the way we are positioned just now," he told Reuters, declining to say why.
($1 = 10.7122 Norwegian crowns)
Market value of Norway's wealth fund https://tmsnrt.rs/3iZIGOn
Norway wealth fund trims overweight tech investments nS8N34W04U
Reporting by Gwladys Fouche in Arendal, editing by Terje Solsvik, Ana Nicolaci da Costa and Barbara Lewis
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
