Norway’s sovereign wealth fund, the world’s largest, yesterday reported a record return on investments of US$185 billion in the first half of the year, recovering from heavy losses seen in the first three months of the year.The 9.4 percent return was due largely to its holdings in Asian technology firms, which have powered ahead on massive demand for artificial intelligence (AI) gear.It marked a sharp rebound from the US$58 billion loss reported in the first quarter, when the fund was weighed down by declines in US tech companies.
Norges Bank Investment Management CEO Nicolai Tangen speaks at the Norges Bank Investment Management annual investment conference in Oslo on April 28.
At the end of June, the fund, which is fueled by the Norwegian state’s oil revenues and invested in assets worldwide, was valued at 22.6 trillion kroner (US$2.38 trillion).Nicolai Tangen, chief executive of Norges Bank Investment Management, which manages the fund, attributed the increase to “chips, chips, chips” at a press conference, referring to demand to develop and power AI models.
The technology sector alone accounted for 1.065 trillion kroner (US$112 billion) of the gains in the first half.The main individual contributors were chip makers including South Korea’s Samsung Electronics Co and SK Hynix Inc, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), US-based Micron Technology Inc and the Netherlands’ ASML Holding NV, a key maker of machines that produce the microchips.However, with the growth driven by a specific sector, the fund’s value is dependent on “an ever smaller number of companies,” Tangen said.“Of course, after a rally like that, you are a bit more nervous, a bit more conscious about all the dangers out there,” Tangen said in a Bloomberg TV interview. “We are seeing a lot of reasons to be really cautious. We are seeing, you know, AI valuations. We are seeing geopolitics.”The fund, which finances a quarter of the Norwegian state’s budget, is therefore increasingly exposed to a potential tech bubble.At the end of the first half, around 72.1 percent of the fund’s assets were invested in equities, 25.8 percent in bonds, 1.6 percent in real estate and 0.5 percent in unlisted renewable energy projects.The return on the fund’s equity holdings was 13 percent in the first half.Its biggest stockholdings are the AI chip giant Nvidia Corp with 612 billion kroner, Apple Inc with 522 billion kroner, Google parent Alphabet Inc with 499 billion kroner, Microsoft Corp with 347 billion kroner and TSMC with 332 billion kroner.
