Norway’s $1.3 trillion sovereign wealth fund, the world’s biggest, posted its first quarterly loss since 2020 after Russia’s invasion of Ukraine and lockdowns in China roiled markets.
The Oslo-based fund lost $74 billion in the first quarter, according to a statement on Thursday. It shed 5.2% on stocks, where it has the bulk of its investments, and 4.8% on fixed income.
The world’s biggest owner of publicly traded companies faced a worsening outlook already before Russia’s full-scale invasion of Ukraine dented the global markets.
Chief Executive Nicolai Tangen warned in January that the fund’s growth over the past 25 years isn’t likely to continue, with interest rates at record lows, equity markets at all-time highs and inflation seen remaining “high for a long time.”
“The first quarter has been characterized by geopolitical turbulence, which has also affected the markets,” Deputy Chief Executive Officer Trond Grande said in the statement.
Its unlisted real-estate holdings gained 4.1%, though they account for less than 3% of its investments.
Norway decided on Feb. 27 to drop Russian assets from the fund in response to the country’s invasion of Ukraine, but ran into problems with actually implementing the decision after Russia banned foreigners from executing trades on its stock markets.
Norges Bank has said that it will return with a recommendation on lifting a freeze on the fund’s investments in Russia once markets are functioning more normally, along with more detailed recommendations on carrying out the sale.
The fund’s loss on its Russian equity stakes could amount to just under $2.8 billion under estimates presented on March 3, with the stake considered to be worth about 2.5 billion kroner ($285 million), down from 27 billion kroner at the end of last year.
Created in the 1990s to invest Norway’s oil and gas revenues abroad, the fund has a portfolio of about 9,000 stocks, and delved into renewable infrastructure for the first time last year.
Overall, the fund’s total return was 0.66 basis points higher than that of the benchmark against which it measures itself.©2022 Bloomberg L.P.