Saturday, June 10, 2023

Norwegian oil fund chief warns market exuberance cannot ‘last forever’

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The head of the world’s largest sovereign wealth fund has warned that the market exuberance seen in the rise of blank check vehicles and amateur traders cannot “last forever.”

Nicolai tangen, director of the $ 1.3 billion Norwegian oil fund, told the Financial Times that “I’m still worried – that’s my middle name” when asked if he was concerned about the possibility of a stock market bubble.

“The positive developments that we have seen in the markets cannot, of course, last forever,” he said, referring to the sudden surge in stocks like GameStop and Nokia due to day traders sharing advice on Reddit. “What we are seeing now is indicative of the type of risk appetite. And the risk appetite is high. You see it through this type of situation like the Spacs [special purpose acquisition companies] and individual investors. “

The Norwegian oil fund owns on average 1.5 percent of every listed share in the world, making it one of the most influential investors in the world.

Mr Tangen, who took over as managing director of the fund manager in September, said the recent market rally was largely caused by stimulus from central banks and governments.

Trond Grande, Deputy Managing Director of the Fund, says the FT in August he worried about the disconnect between a strong recovery in financial markets and a slower recovery in global economies.

Mr Tangen, a former hedge fund manager, has pledged to try to get the Norwegian fund outperforming its benchmark, which has led some academics to worry about the possibility of trying to become a more active investor.

The bottom said Thursday, it had achieved a return of 10.9% last year, largely in the last quarter of the year. Its performance was driven by technology stocks, which returned 42% in 2020 and now represent more than a quarter of the fund’s shares. Its return was 0.27 percentage point above its benchmark, in line with the historical average.

Mr Tangen said that as a ‘close to the index’ fund, which has relatively little ability to weight differently from its benchmark set by the Norwegian government, there is little it can do about to its exposure to the technological sector.

He added that companies such as Apple, Amazon and Tesla had “grown for a reason” in 2020, but said it would be “interesting to see how far the technological leap is made” in terms of the breakthrough. last year for technologies such as videoconferencing.

The fund’s worst performing market last year – the only country it highlighted in which it lost money – was the United Kingdom, where it posted a negative return of $ 70 billion. Norwegian kroner (8 billion dollars) against a positive return of more than 500 billion kroner for the United States. Mr Tangen attributed the UK’s loss to the country’s “peculiar political situation”, which had hurt some businesses.


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