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1Q 2007 Quarterly report

The return on the Government Pension Fund – Global was 1.5 per cent in the first quarter. The rise in international equity markets made the largest contribution to the return. Norges Bank achieved an excess return of 0.09 percentage point compared with the return on the benchmark portfolio defined by the Ministry of Finance.

22 May 2007


The upswing in prices in the capital markets contributed to a positive return on all of the portfolios managed by NBIM. The Government Pension Fund – Global and the investment portfolio in Norges Bank's foreign exchange reserves both generated a return in the first quarter of between 1.4 and 1.5 per cent measured in the relevant currency basket. The Government Petroleum Insurance Fund, which is invested only in fixed income instruments, generated a return of 0.8 per cent.

The upswing in global equity markets continued in the first quarter of 2007. However, the strong growth in prices was interrupted by a downturn in prices at the end of February. The correction was far smaller than the one in May 2006, and prices fell by approximately 6 per cent before the markets rallied. Prices in all of the main markets were higher at the end of the quarter than at the end of 2006. The price of oil and other raw materials rose during the quarter, and companies in the basic materials sector saw the strongest gains. With the exception of IT, prices increased in all sectors. Prices in the bond markets also climbed during the quarter.

Global equity markets have performed strongly over the last four years (see Chart 1-1). Since the beginning of 2003, the returns on the Japanese, European and US markets have been 114, 93 and 71 per cent respectively. An index of equities in 24 emerging markets rose 216 per cent in the same period.

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