Norway sovereign wealth fund lost $174 billion due to inflation, war

• Norway $1.3 trillion sovereign wealth fund lost 1.68 billion Norwegian kroner in the first half of 2022.
• The fund’s return on investments in stocks fell by 17%, while returns on a fixed income and renewable energy infrastructure fell by 9.3% and 13.3%.

The largest sovereign wealth fund in the world, Norway, lost 174 billion dollars, or 1.68 billion Norwegian kroner, in the first half of 2022. This was because the stock market as a whole had a rough six months.

During that time, the $1.3 trillion fund lost 14.4% of its value because stocks and bonds reacted violently to fears of a global recession and skyrocketing inflation.

Norges Bank, the country’s central bank, said Wednesday that the fund’s return was 1.14 basis points (156 billion kroner) higher than the return on the benchmark index.

“The market has been characterised by rising interest rates, high inflation, and war in Europe. Equity investments are down with as much as 17 per cent. Technology stocks have done particularly poorly with a return of -28 per cent,” Nicolai Tangen, CEO of Norges Bank Investment Management, said in a press release.

The fund’s return on investments in stocks fell by 17%, while returns on investments in fixed income and unlisted renewable energy infrastructure fell by 9.3% and 13.3%, respectively.

The fund’s wealth is based on Norway’s huge oil and gas reserves in the North Sea.

The energy was the only sector where the fund didn’t lose money after it put a lot of money into wind power in recent years.

“In the first half of the year, the energy sector returned 13 per cent. We have seen sharp price increases for oil, gas, and refined products,” Tangen said.

The decline is consistent with the fact that the first half of this year has been the worst for the stock market in the United States since the 1970s.

Inflation increases in interest rates and the war in Europe all had a significant negative impact on the major indexes in the United States.

The Dow Jones Industrial Average dropped more than 15%, the S&P 500 dropped more than 20%, and the Nasdaq Composite dropped almost 30% in the first half of the year.