Norway’s sovereign wealth fund, the world’s largest, lost 1.68 trillion Norwegian kroner ($174 billion) in the first half of 2022, as stock markets, in general, experienced a turbulent six months. The fund’s return on investment was a negative 14.4% from January to June, but it was still 1.14 percentage points higher than the return on its benchmark index.
The drop, led by a 28% drop in the value of its technology stocks, was the largest in the fund’s 26-year history, though some losses have since been recovered as markets recovered in July and August.
“The market has been characterised by rising interest rates, high inflation, and war in Europe,” said Nicolai Tangen, Chief Executive Officer of Norges Bank Investment Management, which operates the fund. Tangen, who delivered the fund’s second-highest profit on record last year, has repeatedly warned of impending market weakness and that the fund, which is only allowed to deviate slightly from its benchmark indices, would suffer as a result.
The value of the fund’s stake in Facebook owner Meta Platforms Inc. decreased by 38 billion crowns, resulting in the largest loss in its stock portfolio, followed by Amazon with 35 billion and Apple with 30 billion. Tech and social media stocks have been hurt by increasing interest rates and rivalry between platforms for advertising expenditures being eaten up by inflation after soaring while COVID-19 enhanced demand for online shopping and entertainment.
The sovereign wealth fund was established in 1996 and invests income from Norway’s oil and gas industry. It has investments in more than 9,300 businesses worldwide and owns 1.3% of all publicly traded stocks. Its $1.3 trillion valuation is approximately equivalent to the size of the Mexican economy, which, by some estimates, is the 16th largest in the world.
