Weak Quarter After Stock Market Decline
Press release 10 August 2012
The Government Pension Fund Global returned -2.2 percent, or -77 billion kroner, in the second quarter of 2012 as global stock markets declined.
“A weaker-than-anticipated development in the world economy weighed on stock markets in the second quarter,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund. “There was also increased uncertainty about the repercussions of the European sovereign debt crisis.”
Equity investments returned -4.6 percent and fixed-income investments returned 1.5 percent. The return on these investments was 0.2 percentage point lower than the return on the fund’s benchmark indices. Investments in real estate returned 0.3 percent.
The fund in the quarter reduced its holdings of bonds issued in European currencies to 48.1 percent of total fixed-income investments from 51 percent. It also boosted the share of bonds in American currencies to 40.1 percent and increased the portion of bonds in currencies of Asia and Oceania to 11.6 percent. The changes were in line with a strategy to gradually reduce the share of bonds in currencies of developed European nations. The fund in the quarter also increased investments in government bonds in the currencies of emerging economies such as China, Brazil and India.
The fund’s market value rose 65 billion kroner in the quarter to 3,561 billion kroner. A weakening of the krone against several major currencies boosted the market value by 70 billion kroner. The fund also received 72 billion kroner in new capital from the government. This was invested with 80 percent in equities and 20 percent in fixed income.
The fund held 59.6 percent in equities, 40.1 percent in fixed income and 0.3 percent in real estate at the end of the quarter.