- The loss in 2022 exceeds the previous record of 2008
- Inflation and geopolitical tensions remain risk factors
- Oil and gas industry record cash inflow
OSLO, Jan 31 (Reuters) – Norway’s wealth fund, one of the world’s largest investors, posted a record 2022 loss of 1.64 trillion kroner ($164.4 billion), ending a three-year streak of soaring profits in stocks and bonds. were hit by the Ukrainian war and inflation.
The previous largest loss was 633 billion crowns in 2008.
It ends a record streak for the fund, where annual returns exceeded one trillion crowns in each of the three years from 2019 to 2021, amounting to more than four trillion crowns combined.
“We have invested in 9,000 companies in 70 countries. There is nowhere to hide,” the fund’s managing director, Nicolai Tangen, told a press conference.
The biggest stock market loss came from the fund’s stake in Amazon (AMZN.O), which fell in value by 56 billion crowns, followed by a loss in shares of Facebook owner Meta Platforms (META.O) of 52 billion and Tesla. (TSLA.O) with 47 billion.
Yet despite the record loss, the fund’s value rose overall by 89 billion kroner or $8.9 billion year-on-year, partly due to the weakness of the Norwegian currency and a record cash inflow of 1.1 trillion crowns.
Admissions in 2022 were almost three times the previous record, of 386 billion crowns, set in 2008.
The fund invests Norwegian state revenues from oil production. As Europe’s largest crude exporter and gas supplier after a drop in Russian gas flows, Norway has benefited from high energy prices due to the war in Ukraine.
“We have to be very aware that the influx happened against a tragic backdrop in Europe,” Tangen said.
“But it is an isolated mathematical fact that when oil and gas prices are higher, there is more revenue for the (Norwegian) government and more inflows into the fund.”
The fund holds an average of 1.3% of all listed stocks. It also invests in bonds, unlisted real estate projects and renewable energies.
Looking ahead, Tangen said inflation will continue to be a concern.
“Inflation remains a risk factor and, in particular, related to what happens when China really gets into the consumer side, because it could drive a lot of prices around the world,” Tangen told Reuters.
“And then, of course, we still have geopolitical hotspots.”
The fund’s return on investment in 2022 came in at minus 14.1% for the year, 0.88 percentage points better than the fund’s benchmark return.
($1 = 9.9752 Norwegian kroner)
Reporting by Victoria Klesty in Oslo; edited by Gwladys Fouche, Terje Solsvik and Emelia Sithole-Matarise
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