Nor­way oil fund gains $79bn in 2012


Nor­way's sov­er­eign wealth fund, the world's largest, rose 447 bil­lion kroner ($79 bil­lion) last year as cen­tral bank stim­u­lus mea­sures boosted global stock mar­kets.

The Government Pen­sion Fund Global re­turned 13.4 per­cent in 2012, af­ter fall­ing 2.5 per­cent the year be­fore, the Oslo-based in­vestor said to­day. The $713 bil­lion fund's stocks re­turned 18.1 per­cent, while its bond in­vest­ments climbed 6.7 per­cent. Real es­tate in­vest­ments re­turned 5.8 per­cent.

Stocks ral­lied last year af­ter Euro­pean Cen­tral Bank Gov­er­nor Mario Draghi in July pledged to do "what­ever it takes" to save the euro and later pre­sented a bond buy­ing pro­gram to bring down in­ter­est rates. The U.S. Fed­eral Re­serve an­nounced a third round of quan­ti­ta­tive eas­ing to stim­u­late the world's big­gest econ­omy. The MSCI World In­dex ( MXWO) of stocks, which fell to a six-month low in June, gained 13.2 per­cent in 2012.

"Re­turns were es­pe­cially high in the sec­ond half of 2012 and can in part be re­lated to ac­tions taken by the Euro­pean Cen­tral Bank that were an­nounced in July," the fund said.

The fund, which gets its in­vest­ment guide­lines from the government, held 61.2 per­cent in stocks, 38.1 per­cent in bonds and 0.7 per­cent in real es­tate at the end of 2012. It's man­dated to hold about 60 per­cent in stocks, 35 per­cent in bonds and 5 per­cent in real es­tate. While the in­vestor mostly fol­lows global in­dexes, it has some lee­way to stray from those bench­marks.

Nor­way gen­er­ates money for the fund from taxes on oil and gas, own­er­ship of pe­tro­leum fields and div­i­dends from its 67 per­cent stake in Sta­toil ASA (STL), the coun­try's largest en­ergy com­pany. Nor­way is west­ern Europe largest oil and gas pro­ducer. The fund in­vests abroad to avoid stok­ing domestic in­fla­tion. The government de­posited 276 bil­lion kroner of pe­tro­leum rev­enue into the fund in 2012. The re­turn ex­ceeded by 0.2 per­cent­age point the bench­mark set by the Fi­nance Min­istry.

The fund's largest stock hold­ing at the end of the year was Nes­tle SA (NESN) at a value of 30.1 bil­lion kroner. The largest bond hold­ings were in US Trea­suries at a value of 324 bil­lion kroner, fol­lowed by Ja­panese and Ger­man government bonds.

The fund got its first cap­i­tal in­fu­sion in 1996 and has been tak­ing on more risk as it ex­pands glob­ally, rais­ing its stock port­fo­lio from 40 per­cent in 2007. It first added stocks in 1998, emerg­ing mar­kets in 2000 and real es­tate in 2011 to boost re­turns and safe­guard wealth. It's strug­gling to meet a 4 per­cent re­turn tar­get af­ter rates plunged to record lows and global stock mar­kets failed to re­trace a 2007 peak.

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