Finance

Finance

Europeâ€™s biggest equity investor loses $91 billion

11 March 2009 16:29 (UTC +04:00)

Bakuâ€“ APA-Economics. Norway’s state pension fund, the world’s second biggest investor, lost $90.5 billion last year on its portfolio as the global financial crisis took a heavy toll, the central bank said.
â€œThe financial crisis has dealt a heavy blow to our investments in global equity and fixed income markets,â€ Norges Bank Governor Svein Gjedrem said, Bloomberg reported.
Norway, the worldâ€™s fifth-largest oil exporter and the third-biggest gas exporter, set up the fund to manage its petroleum riches after discovering oil in the North Sea in 1969.
The return generated by the fund, which invests abroad to avoid stoking domestic inflation, was 3.4 percent lower than the benchmark set by the Finance Ministry. Norwayâ€™s central bank runs the fund, while the Finance Ministry sets guidelines.
The fund, the biggest equity investor in Europe, holds about 0.8 percent of global equity markets, according to the report.
Its largest bond holdings were in German government bonds, at 95 billion kroner, followed by U.K. and Italian government bonds.
The $330bn fund is the world’s second largest sovereign wealth fund after that of the United Arab Emirates.
It comprises two separate sovereign wealth funds, one of which invests Norway’s oil earnings abroad.
The negative return of 23.3 percent is the worst result since the fund was created in the early 1990s and wiped out almost all the gains it made in the past decade.
The fund contains nearly all state revenues from the oil industry in Norway, one of the world’s largest oil and gas exporters, and was created to help finance its generous welfare state system once the wells run dry.
In spite of last year’s investment losses, the value of the fund’s international division, commonly known as the "oil fund", nevertheless rose after fresh oil earnings were injected.
Some 384 billion kroner was injected into the oil fund after Norway, the world’s fourth largest oil and gas exporter, saw its earnings soar on the back of record energy prices during summer. The fund’s overall value rose 256 billion kroner to 2.275 trillion kroner by the end of 2008, AFP reported.
Currency movements also counted in the fund’s favour, hence the Fund’s value rose to 2.275 trillion kroner by the end of the year from 2.120 trillion at the end of the July to September quarter, BBC reported.
As such, it owned 0.77% of all listed shares in the world at the end of 2008.