Norwegian state oil fund announces large losses in first half of the year

The Norwegian Oil Fund, as the world's largest sovereign wealth fund is commonly known, lost $ 21 billion (Norwegian Krone 188 billion) in the first half of 2020 as the fund fell 3.4 percent in volatile markets. US $ 1 trillion government pension fund Global, the fund that has amassed fortune from Norwegian oil revenues over the past 25 years, had negative returns on its equity investments - the majority of its investments - in most markets, such as the fund in said its 2020 semi-annual report on Tuesday. The fund's equity investments returned -6.8 percent, investments in unlisted properties returned -1.6 percent, while fixed income investments returned 5.1 percent. At the end of June, a total of 69.6 percent of the fund's value was invested in stocks, 2.8 percent in unlisted real estate and 27.6 percent in fixed-income investments. "During this period there have been large volatility in the stock market. The year started with optimism, but the stock market outlook quickly changed as the coronavirus began to spread around the world," said Norges Bank Investment Management Deputy CEO Trond Grande. "Even though markets rebounded well in the second quarter, we still face considerable uncertainty," said Grande. The worst returns for the fund's equity investments came from oil and gas companies with a -33.1 percent return. "This was mainly due to a drop in oil prices in the first quarter, which was due to both weak demand due to the pandemic and an increase in supply from Saudi Arabia. Low gas prices and refining margins also weighed on the sector," said the Manager of the Norwegian fund. Among the individual stocks, the fund's investments that made the most detractors were Royal Dutch Shell and financial services companies HSBC Holdings PLC and JPMorgan Chase & Co. This year Norway will use a record amount from its fund to counter the economic slump resulting from the COVID-19 pandemic and low oil prices. The government of Western Europe's largest oil producer called for 4.2 percent of the fund's estimated value to be used earlier this year. Norway has rarely used more than 3 percent of the Government Pension Fund Global.