OSLO \u2013 Could Norway\u2019s sovereign wealth fund, the largest in the world with over US$2 trillion (S$2.5 trillion) in assets, go up in smoke? On Aug 11, its manager said it was a possibility and that current global tensions made the prospect less implausible.<\/p>\n
Fuelled by the Norwegian state\u2019s oil and gas revenues, the sovereign wealth fund \u2013 commonly called the oil fund \u2013 has seen its value rise from under 2 billion kroner at its inception in 1996 to more than 22 trillion kroner (S$2.96 trillion) today.<\/p>\n
Nicolai Tangen, chief executive officer of Norges Bank Investment Management which manages the fund, on Aug 11 warned that the phenomenal and extraordinary growth, partly due to luck, was not something that could be expected to continue at the same pace in future.<\/p>\n
\u201cCan the oil fund disappear? The answer is yes. And the worst thing is that in the world we live in today, it\u2019s not totally improbable,\u201d he said in a speech in Arendal, a town in southern Norway where the country\u2019s elite is gathered this week.<\/p>\n
\u201cNo country in history has managed to maintain such a vast fortune over the long term. Fortunes always end up disappearing,\u201d he argued, citing historical examples such as Spain and the United Kingdom.<\/p>\n
Invested in equities, bonds and properties across the world, the Norwegian fund is designed to be a long-term undertaking and to benefit future generations.<\/p>\n
To balance public finances, which would otherwise be in deficit, the government is currently allowed to draw up to 3 per cent from the fund each year, a ceiling that corresponds to the estimated annual return on investments and therefore does not eat into the nest egg itself.<\/p>\n
Among potential risks, Tangen mentioned extreme scenarios such as a nuclear war or biological terrorism, but also that of a prolonged depression triggered, for example, by the bursting of an \u201cAI bubble\u201d \u2013 referring to the high prices of stocks linked to artificial intelligence \u2013 combined with a trade war between the US and China.<\/p>\n
Even though more safeguards are now in place, the latter scenario would be comparable to the great economic depression of 1929 and could wipe out \u201cat least 80 per cent\u201d of the value of stock market investments, Tangen said. AFP<\/p>\n","protected":false},"excerpt":{"rendered":"OSLO \u2013 Could Norway\u2019s sovereign wealth fund, the largest in the world with over US$2 trillion (S$2.5 trillion)…\n","protected":false},"author":2,"featured_media":590705,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-590704","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/590704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=590704"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/590704\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/590705"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=590704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=590704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=590704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}