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Norwegian state wealth fund to invest more in the UK despite Brexit

posted onMarch 4, 2019
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Norges Bank Investment Management, Norwegian state sovereign wealth fund, said on Wednesday (Feb. 27) it  will continue investing in the UK, shrugging off Brexit fears.

“We will continue to be significant” investors in Britain, the fund’s chief executive Yngve Slyngstad told Reuters after the fund presented its 2018 annual report.  “And we foresee that over time that our investments in the UK will increase” he added.

The Oslo-based investor which is worth around $1 trillion takes a long-term investment view of 30-years.

"With our time horizon, which is 30 years plus, current political discussions do not change our view of the situation,” Slyngstad commented when asked about the risks caused by the UK's decision to leave the European Union on 29 March.

The Norwegian fund is already one of the biggest foreign investors in the UK, with investments totalling around 709 billion Norwegian kroner (£62.5 billion) in the country. 

The fund has investments in nearly in 200 UK properties including on Oxford Street, one  of London's most recognisable shopping streets and on Savile Row, the world-famous street for its tailors. It is also a co-owner of Regent Street and New Bond Street.

The fund is also a holder of roughly 6 billion pounds of UK government debt and a shareholder in 394 UK companies.  The stakes it holds include:

  • 0.97% of Rolls-Royce, the British luxury automobile maker 
  • 2.4% of Marks and Spencer, one of the UK's leading retailers. 
  • 1.65% of Sainsbury's, the UK's second oldest (still trading) food retailer. 
  • 2.3% of oil and gas giant BP
  • 2.97% of Barclays investment bank 

The Norway fund, which is the biggest in the world and was built up from Norway’s oil and gas revenues, owns about 1.4 percent of all equities in the world. 

Last year, roughly 8.5% of its stock portfolio was made up of UK equities. That placed the UK 
as its third largest equity portfolio. The US attracted the biggest share of its money, followed by Japan. In previous years, the UK had been second on the list, but Slyngstad put this drop down to "a strengthening of the yen against the pound," the news agency said.

The fund reported a total asset value decline of more than 6% for 2018, dragged lower by global falls in share prices. The only other time the fund declined, since the first money was transferred into it in 1996, was when it fell slightly in 2002.

At the end of 2018, the fund’s biggest  equity investments were Microsoft (64.7 billion crowns), Apple (62.7 billion), Alphabet (57.6 billion), Amazon (54.8 billion), Nestle (53.9 billion) and Royal Dutch Shell (51.3 billion). 

Slyngstad also expressed the fund's strong commitment to UK,  even in the case of a ‘no-deal’ Brexit. The fund employs nearly 250 staff in London and would stay at that level regardless of the outcome of the Brexit talks. “We see no operational consequences of any possible outcomes,” the chief executive officer said. 

The fund's decision comes as top financial firms including Deutsche Bank, Goldman Sachs, Citi and others move parts of their business to other European cities to protect operations after March 29.