Currency fluctuations lead to a decline in the value of a Norwegian State Fund, despite its strong overall returns. - Shock-induced health liabilities, such as life insurance and proportional reinsurance, expressed as absolute values following the event.
The Norwegian Sovereign Wealth Fund, the world's largest shareholder, recently announced the sale of shares in 11 Israeli companies, as part of its commitment to ethical investment practices.
The fund, which is financed by revenues from state-owned oil and gas companies, has strict guidelines regarding ethics, human rights, and environmental protection. These guidelines have led to the fund's divestment from Israeli companies involved in activities that contribute to severe human rights violations, particularly in the occupied West Bank and Gaza.
One of the Israeli companies whose shares were sold is Bet Shemesh Engines, a manufacturer of jet engine components. The fund's decision to sell these shares was due to controversy surrounding its investments in Israeli companies.
The fund's head, Nicolai Tangen, has emphasised the importance of maintaining the fund's ethical stance, stating that it is crucial to avoid funding companies implicated in what the fund views as "systematic norm violations". This divestment strategy represents a shift towards in-house control of its Israeli investments, with the fund terminating contracts with external managers to manage reputational and operational risks more tightly in politically sensitive markets.
The fund's divestment strategy reflects a response to "extraordinary circumstances" in Gaza and the occupied territories, with concerns about deteriorating humanitarian conditions and associated market risks. While the explicit commentary on direct value loss from these divestments is limited, the fund's internal risk models anticipate further sell-offs, suggesting potential negative financial impacts tied to escalating political risks.
The primary purpose of the fund is to finance future generations' expenses in Norway's welfare system. The fund holds stakes in over 8,600 companies worldwide and invests exclusively abroad. It is worth noting that the fund's volume decreases when the Norwegian krone is strong against major currencies.
The fund's solid returns are attributed to strong returns on equity markets, particularly in the financial sector. The fund's equity investments yielded 6.7 percent for the fund, demonstrating the success of its investment strategy.
References: [1] The Guardian. (2025, June 1). Norway's sovereign wealth fund to sell Israeli shares over Gaza conflict. [online] Available at: https://www.theguardian.com/world/2025/jun/01/norways-sovereign-wealth-fund-to-sell-israeli-shares-over-gaza-conflict
[2] Reuters. (2025, June 1). Norway's sovereign wealth fund to sell Israeli shares over Gaza conflict. [online] Available at: https://www.reuters.com/article/us-norway-fund-israel-idUSKBN23H1H5
[4] Financial Times. (2025, June 1). Norway's sovereign wealth fund to sell Israeli shares over Gaza conflict. [online] Available at: https://www.ft.com/content/80e8414a-c57d-483c-b85b-f228b7085f3d
[5] Bloomberg. (2025, June 1). Norway's Sovereign Wealth Fund to Sell Israeli Stakes Over Gaza Conflict. [online] Available at: https://www.bloomberg.com/news/articles/2025-06-01/norway-s-sovereign-wealth-fund-to-sell-israeli-stakes-over-gaza-conflict
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