Norway’s sovereign wealth fund has hit US$1 trillion for the first time, driven higher by climbing stock markets and a weaker US dollar.
The milestone valuation was reached for the first time on Tuesday, September 19 at 2:01am in Oslo, Norges Bank Investment Management.
“I don’t think anyone expected the fund to ever reach $1tn when the first transfer of oil revenue was made in May 1996,” said Yngve Slyngstad, the chief executive of the fund. “Reaching $1tn is a milestone, and the growth in the fund’s market value has been stunning.”
But the extreme wealth, about equal to the GDP of Mexico, isn’t unalloyed good news.
The fund’s sheer size has made it a challenge to find markets big enough to invest in. Meanwhile, Norway’s politicians are finding it hard to resist the temptation to raid the world’s biggest state piggy bank, with the petro-dollar addiction threatening to overheat the $400 billion economy.
It has few rivals in terms of size. Japan’s Government Pension Investment Fund was valued at $1.3tn at the current exchange rate) at the end of March. China, of course, has about $3tn in currency reserves. There are also big cash-piles at money management firms such as BlackRock’s $5.7tn and Vanguard Group’s $4.4tn.
Slyngstad recently suggested it’s now largely fruitless for it to enter new asset classes such as infrastructure because that would be costly and only deliver a blip on overall returns. The investor is also retrenching its global bond portfolio, cutting 23 currencies down to just three -- the dollar, the euro and the pound. The fund says it doesn’t make sense to have more diversification in a world in which prices and rates are converging.
Its huge size has also driven the fund to respond to problems with trading by devisingelaborate strategies to hide its selling and buying from anyone seeking to front-run its activities.
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Read more:
World's biggest wealth fund set to drop emerging markets and yen
Norway’s central bank likely finished with easing as economy stabilises
Fitch lowers Qatar's sovereign rating
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But being big has its advantages, especially for a lean organisation like Norges Bank Investment Management. The fund only employs about 550 people in offices across the entire globe (Oslo, New York, London, Shanghai and Singapore). Management costs were equal to just 0.02 per cent of assets in the most recent quarter, down from 0.07 per cent five years ago.
The decline in costs comes despite the fund’s expansion into real estate. It’s snapped up prime properties in Times Square, the Champs Elysees and London’s Regent Street, among other locations. It owned 200bn kroner (Dh95.51bn) in real estate at the end of June.
For now, there’s been little discussion about breaking the fund up into smaller, more nimble entities, though the government is currently pondering a proposal to shift it out of the central bank and strengthen oversight.
So what lies ahead? Norway expects the fund to keep growing through 2025, when it’s predicted to hit $1.3tn at today’s exchange rate. But such estimates are notoriously unreliable. Its current size already exceeds the milestone it wasn’t expected to reach until 2018.
With interest rates at record lows and returns hard to come by, the fund’s management is growing less optimistic. The central bank governor Oystein Olsen has warned the decline in oil prices means the fund may already have passed its peak.
Norway’s government last year made direct withdrawals from the fund for the first time in its history and is expected to take out about 70bn kroner this year. Meanwhile, Norway has lowered the fund’s expected return to 3 per cent from 4 per cent.
The fund has been given permission to raise its stock holdings to 70 per cent from 60 per cent, with an equivalent cut in bonds. That could help it eke out higher returns, or at least maintain the 8 per cent annualised real return it’s had over the past five years.
But Mr Slyngstad also recently said he sees fundamental issues with the global economic system and trade, which is being buffeted by increasing global political risk. And that’s not good for a fund that owns 1.3 per cent of global stocks.
Norwegian finance minister, Siv Jensen, on Tuesday also praised the fund for its “good management” and pledged a stable political climate as she prepares for another four years in power after securing reelection last week.
“The fund’s value has increased by 3tn kroner in the past four years,” she said. “The guidelines for fiscal policy should secure that the fund is to the benefit of current and future generations.”
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
Panipat
Director Ashutosh Gowariker
Produced Ashutosh Gowariker, Rohit Shelatkar, Reliance Entertainment
Cast Arjun Kapoor, Sanjay Dutt, Kriti Sanon, Mohnish Behl, Padmini Kolhapure, Zeenat Aman
Rating 3 /5 stars
Tell-tale signs of burnout
- loss of confidence and appetite
- irritability and emotional outbursts
- sadness
- persistent physical ailments such as headaches, frequent infections and fatigue
- substance abuse, such as smoking or drinking more
- impaired judgement
- excessive and continuous worrying
- irregular sleep patterns
Tips to help overcome burnout
Acknowledge how you are feeling by listening to your warning signs. Set boundaries and learn to say ‘no’
Do activities that you want to do as well as things you have to do
Undertake at least 30 minutes of exercise per day. It releases an abundance of feel-good hormones
Find your form of relaxation and make time for it each day e.g. soothing music, reading or mindful meditation
Sleep and wake at the same time every day, even if your sleep pattern was disrupted. Without enough sleep condition such as stress, anxiety and depression can thrive.
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SPECS
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Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
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The years Ramadan fell in May
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If you go
The Flights
Emirates and Etihad fly direct to Johannesburg from Dubai and Abu Dhabi respectively. Economy return tickets cost from Dh2,650, including taxes.
The trip
Worldwide Motorhoming Holidays (worldwidemotorhomingholidays.co.uk) operates fly-drive motorhome holidays in eight destinations, including South Africa. Its 14-day Kruger and the Battlefields itinerary starts from Dh17,500, including campgrounds, excursions, unit hire and flights. Bobo Campers has a range of RVs for hire, including the 4-berth Discoverer 4 from Dh600 per day.
MATCH INFO
Burnley 0
Man City 3
Raheem Sterling 35', 49'
Ferran Torres 65'
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Dr Amal Khalid Alias revealed a recent case of a woman with daughters, who specifically wanted a boy.
A semen analysis of the father showed abnormal sperm so the couple required IVF.
Out of 21 eggs collected, six were unused leaving 15 suitable for IVF.
A specific procedure was used, called intracytoplasmic sperm injection where a single sperm cell is inserted into the egg.
On day three of the process, 14 embryos were biopsied for gender selection.
The next day, a pre-implantation genetic report revealed four normal male embryos, three female and seven abnormal samples.
Day five of the treatment saw two male embryos transferred to the patient.
The woman recorded a positive pregnancy test two weeks later.
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info-box
COMPANY PROFILE
Company name: Happy Tenant
Started: January 2019
Co-founders: Joe Moufarrej and Umar Rana
Based: Dubai
Sector: Technology, real-estate
Initial investment: Dh2.5 million
Investors: Self-funded
Total customers: 4,000
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
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