The start of the year is likely to have been a violent upturn for Norway’s money bin.
CONTINUES TO BRING IN MONEY: Oljefondet’s chief Nicolai Tangen. Photo: Terje BendiksbyPublished: Published:
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The oil fund continues to drain at a furious pace.
The fund’s value is now NOK 17,660 billion. This is shown by the unofficial counter on the website of Norges Bank Investment Management (NBIM).
During the first three months of the year, the fund has thus increased by almost NOK 1,900 billion.
That equates to roughly the same amount of money as government in October estimated that the state will have expenses throughout 2024.
At the end of last year, the fund was worth NOK 15,764 billion. Throughout the year, the total return was a record high NOK 2,222 billion.
The nation will only get the final conclusion on how big the fund actually is on 18 April, when NBIM presents key figures for the first quarter.
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Weak krone affects
The fund’s development is particularly affected by the return on shares and interest-bearing securities. In recent years, the fund has also received a lot of oil money transferred from the government.
A weak Norwegian krone also contributes to the fund’s value in krone being higher than it would otherwise be.
The oil fund has, among other things, a lot of money in the American stock market. There, the broad S&P 500 index has continued its rise from last year, and ended the first quarter up around 10 per cent. A total of 46.9 per cent of the Oil Fund’s investments were tied up in US shares, interest-bearing securities and property at New Year’s.
At the same time, the krone has weakened significantly against the US dollar throughout the quarter. On Wednesday, one dollar cost NOK 10.80, which is more than six percent more than at the start of the year.
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Heavy inside giants
The fund’s largest shareholdings at New Year were in technology giants such as Microsoft, Apple and Alphabet.
The fund is also heavily invested in the computer chip supplier Nvidia, which has enjoyed fabulous success in the past year.
In the last three months alone, the stock has risen 87 percent on Wall Street.
Can mean a lot for the national budget
But the total fund value measured in kroner and øre means little for what Norway can buy from abroad for the values. The fund has large investments in shares and interest-bearing securities in international currencies such as dollars and euros.
However, the value measured in kroner is what determines how much money Norwegian governments have available for use over the national budget, a number that has been steadily increasing in recent years.
Over time, the annual use of oil money must be limited to three percent of the fund’s value. This is the so-called action rule. The value of this in pure money naturally becomes higher with each passing year as the Oil Fund increases its values.
With the exception of 2002 and 2018, the fund has increased in value every single year since its inception in the 90s. But the fund’s management has warned a number of times that the value could also fall significantly in a possible crisis period.
2024-03-31 14:06:09
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