Russia's Invasion of Ukraine Exacerbates Inflationary Pressures and Depresses Economic Growth, Says Sovereign Wealth Fund Chief

Strategic Insights -

Norway's $1.3 trillion oil fund, the world's largest sovereign wealth fund, has seen its Russian holdings plummet in value, with a 90% decline in the past two weeks, according to its chief executive, Nicolai Tangen. The fund's Russian assets, worth NKr27bn ($3bn) at the end of 2021, are now likely worthless, with some remaining shares worth only NKr2.5bn. The fund's deputy chief executive, Trond Grande, described the financial sanctions imposed on Russia as a "test of the resilience of the system," which could affect the global supply chain, food, and energy supplies. Tangen warned that investors face years of low returns due to high inflation, which has become a permanent feature of the global economy.

Key Takeaways:

  • Norway's $1.3 trillion oil fund, the world's largest sovereign wealth fund, has seen its Russian holdings decline by 90% in value over the past two weeks.
  • The fund's Russian assets, worth NKr27bn ($3bn) at the end of 2021, are now likely worthless, with some remaining shares worth only NKr2.5bn.
  • The fund's deputy chief executive, Trond Grande, described the financial sanctions imposed on Russia as a "test of the resilience of the system."
  • The sanctions could affect the global supply chain, food, and energy supplies.
  • Nicolai Tangen, chief executive of the oil fund, warned that investors face years of low returns due to high inflation, which has become a permanent feature of the global economy.
  • The fund had NKr27bn ($3bn) in Russian equities at the end of 2021 and was still worth more than NKr25bn two weeks ago before plummeting to about NKr2.5bn on Thursday.
  • The fund has largely written off its Russian holdings after the Norwegian government ordered them to be frozen and eventually sold.
  • The oil fund has NKr27bn ($3bn) in Russian equities, with some remaining shares worth only NKr2.5bn.
  • The fund's equity holdings are down about 8% this year to date.

Statistics:

  • The oil fund's Russian holdings declined by 90% in value over the past two weeks.
  • The fund's Russian assets, worth NKr27bn ($3bn) at the end of 2021, are now likely worthless, with some remaining shares worth only NKr2.5bn.
  • The fund's equity holdings are down about 8% this year to date.
  • The oil fund has NKr27bn ($3bn) in Russian equities, with some remaining shares worth only NKr2.5bn.
  • The fund's Russian assets account for a significant portion of its overall portfolio.

Sources:

  • Financial Times (January 2022)
  • Financial Times (February 2022)
  • The Norwegian government
  • Norway's $1.3 trillion oil fund