The performance of the world's largest sovereign wealth fund has been released!
On October 22nd, the financial report released by the Norwegian government's Global Pension Fund showed that in the third quarter, the fund's profit reached NOK 835 billion, equivalent to approximately RMB 540 billion, due to the boost in the stock market caused by the decrease in interest rates.
The Norwegian Sovereign Wealth Fund is the world's largest sovereign wealth fund, with an overall investment return rate of 4.4% in the third quarter, including a stock investment return rate of 4.5%. As of the end of the third quarter of 2024, the total net value of the fund was 18.87 trillion Norwegian kroner, equivalent to RMB 12.29 trillion.
Made a whopping 540 billion yuan in the third quarter
The Norwegian government's Global Pension Fund announced on the 22nd that as major central banks around the world enter a monetary easing cycle, it boosted investors' risk appetite and earned a profit of NOK 835 billion (approximately RMB 540 billion) in the third quarter of 2024. In the third quarter, the overall investment return rate of the fund was 4.4%, lagging behind the benchmark index by 0.1 percentage points.
(Quarterly return rate of the Norwegian government's global pension fund)
The data shows that the fund's stock investment return rate in the third quarter was 4.5%, fixed income investment return rate was 4.2%, and non listed real estate investment return rate was 0.8%. Trond Grande, Deputy CEO of Norwegian Bank Investment Management, the management agency of the world's largest sovereign wealth fund, said, "We have achieved positive returns in all investment areas, and the decline in interest rates has led to a general rise in global stock markets
As of September 30, 2024, the total net value of the Norwegian government's global pension fund is 18.87 trillion Norwegian kroner. 71.4% of the fund's assets are invested in stocks, 26.8% in fixed income, 1.7% in non listed real estate, and 0.1% in non listed renewable energy infrastructure. That is to say, as of the end of the third quarter, the fund's stock investment market value was NOK 13.469 trillion, fixed income investment was NOK 5.06 trillion, unlisted real estate investment was NOK 319 billion, and renewable energy infrastructure investment was NOK 22 billion.
The Norwegian government's Global Pension Fund is the world's largest sovereign wealth fund, established in the 1990s. With the discovery and development of Norway's offshore oil resources, the fund aims to provide a stable source of funding for Norway's future fiscal needs, particularly the pension system. So far, the fund has invested in over 8760 companies in 71 countries and regions worldwide.
[align center] Be cautious of technology stocks?
On October 22nd, Trond Grande, Deputy CEO of Norwegian Bank Investment Management, stated that recent changes in monetary policy have had a "significant impact" on the fund's third quarter performance. Trond Grande also stated that technology stocks have seen significant gains in the early stages and may need to be cautious in the future.
Trond Grande said, "If you think about it carefully, this has been a turbulent season. The market fluctuated greatly throughout the entire summer from July to August, and then you began to speculate whether the Federal Reserve would have a soft landing and whether it would cut interest rates. I think what you see from our data is that as the tide rises, all ships will rise, so you see the stock market rise sharply on the basis of lower interest rates
Data disclosed in mid August showed that in the first half of this year, the Norwegian government's global pension fund received an investment return of 1.48 trillion Norwegian kroner, with an investment return rate of 8.6%, equivalent to approximately 985.7 billion yuan at the time. Among them, the return rate of stock investment is 12.5%, the return rate of fixed income investment is -0.6%, the return rate of non listed real estate investment is -0.5%, the return rate of listed real estate investment is 3.5%, and the return rate of unlisted renewable energy infrastructure is -17.7%. As of the end of June, the top five holdings of the Norwegian government's global pension fund were Microsoft, Apple, Nvidia, Alphabet (parent company of Google), and Amazon. In the first half of the year, the fund reduced its holdings in Meta, Novo Nordisk, and ASML. At the time, Trond Grande stated that it did not expect the stock market to rise as it had in previous years. He said that a large amount of uncertainty and a "completely different geopolitical situation" mean that global stock markets are now facing more risks.
The global easing cycle is currently underway, as inflation rates in many high-income countries decrease, major central banks are taking measures to soften their aggressive stance on monetary policy. Last month, the Federal Reserve announced a sharp interest rate cut of 0.5 percentage points. The Bank of England cut interest rates for the first time since the COVID-19 in August. The European Central Bank took action last week and cut interest rates for the third time this year. However, the Bank of Japan maintained stable interest rates last month and continued to cautiously promote the normalization of monetary policy. In the process of the global shift towards loose policies, the Bank of Japan is seen as an outlier.
When asked about the outlook for technology stocks in the coming months, Trond Grande said, "This is a challenge, isn't it? Because technology stocks have achieved amazing success behind all the hype about artificial intelligence (let's call it hype)." "So, I think in this situation, you may need to be careful," he added.
For the current US stock market, Citigroup strategists have stated that exposure to the S&P 500 index has reached a high level, which was followed by a 10% decline in the index in the past.
The long position of the benchmark index linked futures is at its highest level since mid-2023 and appears to be "particularly high," wrote the team led by Chris Montagu in the report. The above team stated, "We are not suggesting that investors should start reducing their exposure, but when the market has such high positions like this, the risk of position adjustment does indeed increase
UBS, on the other hand, continues to be bullish on US stocks. UBS believes that the US stock market is expected to achieve double-digit gains again next year. The bank's strategist was bullish on the US stock market in a report last Friday, predicting that the S&P 500 index will reach 6600 points by the end of next year. This prediction means that the benchmark index has about 13% upward potential compared to the current level, and the "no landing" economy will be the driving force behind this upward trend.
UBS stated that the slowdown in price growth has laid the foundation for the Federal Reserve to continue cutting interest rates, which is beneficial for the stock market. According to CME's Fedwatch tool, the market has a 72% chance of the Federal Reserve cutting interest rates by another 50 basis points before the end of the year. UBS strategists added that although investors may see some volatility before the November election, it is unlikely to offset more positive market catalysts.
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