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The world’s biggest sovereign wealth fund does not intend to shed US assets, according to Norway’s finance minister Jens Stoltenberg, despite concerns over the Middle East war and America’s mounting debt.
Since US President Donald Trump’s so-called liberation day tariffs push in April last year, debate has intensified among some foreign investors and pension funds over concentrated exposure to an increasingly volatile US. Some members of Norway’s parliament have suggested its fund is overexposed there.
“There have been some questions [about] ‘should we reduce’; that’s a political decision,” said Stoltenberg in an interview with the FT. “But I don’t foresee any big changes.”
“We have no plans to reduce our exposure in the US.”
Norway’s Government Pension Fund Global, with more than $2tn in assets amassed through sales of its vast oil resources, is invested in foreign markets and is used to smooth out short-term fluctuations in the nation’s budget and save for its future economy. More than half its assets are invested in the US, home to the world’s largest capital markets, which inherently comprise a major component of the benchmarks that fund managers use to construct portfolios.
The comments from Stoltenberg — who is the former secretary-general of Nato, as well as the former prime minister of Norway — come as the US-Israeli war in Iran has soured the mood in Europe about the US and sparked questions about its participation in international alliances including Nato.
But “there is no way to hide [$2tn]”, he added, acknowledging the reality that America’s presence in capital markets is so large that big funds will always have exposure to it.
Fund managers and central bankers around the world have increasingly hedged their exposure to the US, whether or not they are able to exit the market. Danish pension fund AkademikerPension in January said it was selling all of its Treasury holdings, noting America’s excess debt and fiscal outlook were too risky. Central banks around the world have added to their holdings of gold to ballast primarily reserves made up of Treasury bonds.
More broadly, Stoltenberg said: “There are many things to be worried about. I’m worried about the economic consequences of the war in the Middle East. I am worried about government debt, which is much higher than it has been since the second world war.”
“I’m worried about the fact that many countries struggle to get inflation down, worried that Europe struggles to get growth up,” he added, “and I’m worried about of course the potential that some stock markets may be overvalued.”
Stoltenberg — known as the “Trump whisperer” during his tenure at the top of Nato — managed to keep the alliance intact even as the US president expressed doubts in his first term.
He remains optimistic about Washington’s role in the partnership. Although “it’s not written in stone that Nato will last for ever”, he said, it is in the “national interest of the US to have a strong Nato”, in part because Russia’s nuclear weapons “are not aimed at Oslo . . . They are aimed at Washington and New York.”
In the longer term, Stoltenberg said: “I’m a fundamental optimist.”
Source:
www.ft.com
