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NORWAY: “Black Gold” Fund reaches $1 trillion beating all expectations

posted onSeptember 21, 2017
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The sovereign wealth fund of Norway, officially known as the Government Pension Fund of Norway and locally known as the oil fund, hit an unprecedented $1 trillion value on Tuesday. The fund’s value has increased due to higher climbing stock markets and a weaker US dollar, which increases the dollar value of its holdings in other currencies.

It has now become the world’s largest fund and is equivalent to roughly 1.4 million Norwegian kroner ($190,000) for each man, woman and child in Norway, a country of 5.2 million people.

"I don’t think anyone expected the fund to ever reach 1 trillion dollars when the first transfer of oil revenue was made in May 1996. Reaching 1 trillion dollars is a milestone, and the growth in the fund’s market value has been stunning", Yngve Slyngstad who manages the fund on behalf of the people of Norway said in a statement.

The Scandinavian country’s fund was established over 20 years ago as a way of protecting the economy from fluctuations in the price of oil and saving revenues generated from the oil and gas industry for future generations. Norway first deposited oil and gas profits into the fund in May 1996 and in January 2016 made the first ever withdrawal from the pot of cash to address a slowing economy.

The fund is among the world's biggest investors in stocks, owning $667 billion worth of shares in over 9,000 companies in 77 countries. It owns about 1.3 per cent of all listed stocks globally and about 2.3 per cent of all stocks listed in Europe. Among its largest holdings are corporations including Google's parent company Alphabet, Facebook and Roche.

The fund is managed by the Norges Bank Investment Management, a department of the country’s central bank and in addition to stocks, owns a whole host of different financial assets, including bonds and property in cities like Paris, London and New York.

But it’s bound by an ethical charter, under which it cannot invest in companies that produce tobacco, nuclear arms or directly or indirectly contribute to killing, torture, deprivation of freedom or other violations of human rights in conflict situations or wars.

In 2016, the fund made 447 billion Norwegian kroner ($57 billion) and this year made 499 billion kroner ($63 billion) in just the first two quarters.

Meanwhile, the fund has announced its support for the planned $74 billion merger of German industrial gases group Linde and U.S. peer Praxair, creating the world's largest supplier of industrial gases.