Norwegian fund’s Russian investments worthless, says CEO
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General view of the Norwegian Central Bank, home of Norway’s sovereign wealth fund, in Oslo, Norway March 6, 2018. REUTERS/Gwladys Fouche/File Photo
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OSLO, March 3 (Reuters) – The Russian assets of Norway‘s $1.3 trillion fund, the largest in the world, have become worthless after Russia invaded Ukraine and are selling them under government instructions will take time, the fund’s CEO said Thursday.
The fund held investments in Russia worth some 27 billion crowns ($3.0 billion) at the end of 2021, or 0.2% of its total value, compared to 30 billion crowns a year earlier. .
As of March 2, they were likely worth 2.5 billion crowns, CEO Nicolai Tangen told a press conference on Thursday, noting that their exact value was “very uncertain” given that the Moscow stock exchange has been closed since Monday. .
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“They’re pretty much written off,” Tangen told Reuters later.
The fund’s Russian assets consisted of shares in 51 companies at the end of 2021. The most valuable holdings were in gas producer Gazprom, bank Sberbank (SBER.MM) and oil company Lukoil (LKOH.MM) , which together accounted for two-thirds. of the total.
All investments were in equities, with 80% of them listed on the Moscow stock exchange, 18% in London and 0.6% in New York, a spokesman for the fund told Reuters.
On the morning of the invasion, February 24, the fund’s management held an investment meeting and “decided to do very little”.
“We didn’t freeze activity but net activity was very low,” Tangen said.
MUST SELL
On Sunday, the Norwegian government ordered the fund to first freeze and then divest its Russian assets. The ban also includes Russian stocks listed in London and New York, Tangen said. Read more
The fund said the divestment would take time because it was unclear when the Moscow stock exchange would reopen and how trading would operate. The fund must also ensure that it does not sell to individuals under international sanctions.
“So we don’t know what the plan will look like,” Tangen said.
More broadly, the war in Ukraine “amplifies” risk in financial markets, he said.
“It has an inflationary effect and we see it through energy, food, other raw materials coming from this part of the world and we see it in economic growth. All things being equal, (we see) weaker economic growth,” Tangen said.
“For businesses, the risk is more on the supply chain, with issues…that could have an effect. We are seeing some car production shut down because of this, but it’s relatively low ( until now).
“(Globally) all of this is negative for globalization.”
Investing state revenues from oil and gas production and managed by a unit of the central bank of Norway, the fund is one of the largest investors in the world, investing its cash in stocks, bonds , real estate and renewable energy projects.
The value of the fund was 12.3 trillion crowns at the end of 2021, or $257,000 for every Norwegian man, woman and child. Read more
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Editing by Terje Solsvik and Elaine Hardcastle
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