NORWAY - The Norway Government Pension Fund Global today announced losses of NOK155bn (€19.5bn) for its second quarter as a result of weak global stock markets.
The fund, which only invests in equity and fixed income, saw negative returns of 9.2%, for the former, while the latter grew by 1%. Of all regions, Asia and Oceana offered the strongest returns at -3.5%, while Europe performed worst with negative returns in excess of 12%.
Despite the negative returns of 5.4% between April and June, NOK35bn in inflows from the country's government as well as fluctuations in the krone exchange rate helped offset the negative return, allowing fund assets to increase by NOK29bn to NOK2,792bn.
Yngve Slyngstad, CEO of Norges Bank Investment Management (NBIM) said that Europe saw the largest stock market fall, where the fund holds around half of its equity investments.
"The decline was largely driven by concern over high sovereign debt in some European countries, funding challenges for banks and fears of a new economic slowdown," he added.
NBIM said further that while Greek government bonds were removed from its benchmark portfolio in June following downgrades from credit rating's agencies such as Moody's and Standard & Poor's, it would not necessarily lead to a sale of Greek debt.
Additionally, NBIM felt the fallout from BP's recent oil spill in the Gulf of Mexico, with its stocks reducing by almost 15% in value over the quarter. The oil giant fell from third to ninth place, behind competitors Shell and Exxon Mobil, in the fund's overall largest equity holdings, while Swizerland's Nestlé retained the top spot.
Slyngstad said the spill "put the spotlight on safety standards in the oil industry".
He added: "NBIM supports the board of BP's commitment to ensure that safe and reliable operations top the company's set of priorities.
"We also seek a wider industry effort that should be led by the largest companies to improve safety and environmental standards."
The fund held 59.6% of all assets in equities at the end of June, with the remaining 40.4% invested in fixed income.