War in Ukraine: the Norwegian sovereign wealth fund joins the boycott of Russia

Posted Feb 28 2022 at 11:45Updated Feb 28. 2022 at 12:22

At the head of 1.170 billion euros, the Norwegian sovereign fund joins the global boycott of Russia. The Ministry of Finance, which oversees the state investment fund, announced that it was going to sell its 2.8 billion dollars in assets (stocks, bonds) in Russia. These represent 0.2% of its global assets.

The largest sovereign wealth fund in the world wants to wait to sell under better conditions, and not do so in panic. A risk assumed. Nicolai Tangen, the fund’s managing director and former hedge fund manager, told Bloomberg on Friday that “selling Russian stocks now would be a gift to the oligarchs who could buy them back at a low price”. In addition to the oligarchs, the Russian sovereign wealth fund could invest in shares of the Moscow Stock Exchange in order to support prices, as it has done in the past.

At the end of 2020 (latest detailed data available), the sovereign wealth fund was invested in 47 Russian stocks. Its three main investments (Gazprom, Lukoil and Sberbank) represented an investment of nearly $1.6 billion. Also listed in London in the form of an ADR (certificate issued by a bank and which represents an action), the title Sberbank – whose European subsidiary is now on the verge of bankruptcy – collapsed by 62% in the morning of this Monday .

No Russian corporate bonds

On the debt side, the sovereign wealth fund is not invested in Russian corporate bonds. At the end of 2020, he only held Russian state debt, for 785 million dollars. The Norwegian fund began investing in Russian bonds in 2012 as part of the diversification of its bond investments in emerging countries.

In 2014, during the invasion of Crimea, Russia represented an investment five times greater than today (1% of capital under management). “We have significant investments in Russia and we see that the risk profile of this country has changed,” said Yngve Slyngstad, the former manager of the fund, at the time.

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