Tech stocks help Norway wealth fund on Q3 gain

Still sees slight disconnect between markets, real economy; stimulus, monetary policy helping markets; fund returned +3.4% in Q3

Norway’s $1.16tn sovereign wealth fund, the world’s largest, reported a thirdquarter gain of 412bn crowns ($44.31bn) yesterday, fuelled partly by rises in US technology stocks during the coronavirus crisis.

Tech was among the few industries to benefit from lockdown measures to curb the spread of the pandemic, with more people working and shopping from home. “The financial markets were still influenced by uncertainty related to the coronavirus. Regardless, equity markets returned well, mostly due to strong performance in the technology sector in (the) US,” fund CEO Nicolai Tangen said in a statement. Founded in 1996, the Norwegian fund holds stakes in around 9,200 companies globally, owning 1.5% of all listed stocks.

It also invests in bonds and real estate.

The fund said in August it expected more turmoil on financial markets as the world continued to fight Covid-19, with the full impact on the real economy still unclear. “That (still) holds true, maybe even more so now, with the recent second wave... Nobody sees the full end to this,” Deputy CEO Trond Grande told Reuters yesterday. “We are ourselves preparing for this (the pandemic) to last for some time... well into next year.”

Grande still saw a slight disconnect between the real economy and financial markets, which have been supported by fiscal stimulus and monetary policy.

“We do not have a clear view on what that means for certain sectors, whether we are going to travel as much as we did, or if we are going to change our habits,” he said. Despite the turmoil, the fund made a positive return of 4.3% in the third quarter, led by equities, which accounted for 70.7% of its portfolio at the end of September, with a 5.7% return.

The overall return was three basis points lower than the return on the fund’s benchmark index, it said. The fund’s overall value is equivalent to approximately $217,000 for every man, woman and child in Norway.