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Norway's portfolio investments abroad grows 12%

posted onJuly 5, 2018
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Norway's foreign portfolio investment amounted to NOK 10 235 billion ($ 1.2 billion) at end-2017, an increase of 12 per cent from end-2016, according to Statistics Norway.  

A positive development in world financial markets contributed to the rise in Norway's total portfolio investments abroad by NOK 1 096 billion from end-2016 to end-2017 with  investments in Sweden and China standing out with a solid growth.

Norway's total portfolio investments in Sweden increased by NOK 102 billion to NOK 443 billion at the end of 2017. Of this increase, NOK 73 billion can be attributed to investments in bonds. Norwegian banks' purchases of Swedish debt securities are the main reason for larger stocks of securities in 2017.

During the same period, Norway's total portfolio investments in China increased by NOK 67 billion to NOK 202 billion by the end of 2017. Among the factors contributing to this increase is the strong share price growth which characterised the year of 2017 in Asian stock markets combined with net purchases of securities. 

However, Japan is still the most important single country in Asia for Norwegian investors, the national statistical institute of Norway said.

Norway's foreign portfolio investment

Change in the portfolio composition
The distribution of the asset classes equity and debt securities was 64 and 36 per cent respectively at end-2017, compared to 60 and 40 per cent at end-2016. This shift in composition is mainly due to a change in the Government Pension Fund Global investments’ mandate on 1 January 2017.

GPFG, the largest investor
The government sector, with the Government Pension Fund Global (GPFG) as the dominant investor, was the largest contributor, with NOK 8 372 billion in portfolio investments. Despite a net withdrawal from the fund by the Norwegian government in 2017, government investments increased by 13 per cent. A positive development in world financial markets and a moderate weakening of the Norwegian currency contributed to this.

GPFG also known as the Oil Fund, was established over 20 years ago and has over US$1 trillion in assets, including 1.3% of global stocks and shares, making it the world’s largest sovereign wealth fund. As of May 2018 it was worth about $195,000 per Norwegian citizen. 

Mainland business investment grows
According to the second Economic Survey of 2018 published last month by the Oslo-based institute, 
mainland business investment grew in both 2016 and 2017. In the first quarter of this year mainland business investment was 2.2 per cent higher than in the same quarter in 2017. Despite its moderate size, investment in the production of petroleum-related services contributed a substantial 1.7 percentage points to this growth. However, other goods production, i.e., goods production other than manufacturing and mining, made an important contribution to growth, while all services except service activities incidental to oil and gas extraction pushed down four-quarter growth. 

When it comes to investment intentions for next year, in a Statistics Norway’s survey published in May, companies reported their estimates. The manufacturing investment projections for 2019 is about 15 per cent higher than the corresponding projections for 2018 made in May last year. The upturn in 2019 is largely due to an investment surge of 40 per cent in the industrial grouping refined petroleum products, chemicals and pharmaceuticals manufacturing compared with 2018. 

Statistics Norway was formally established as an independent entity in 1876.