Nicolai Tangen, the CEO of Norges Bank Investment Management, voiced concerns over significant market risks during the World Economic Forum in Davos. As the head of the world's largest sovereign wealth fund, Tangen highlighted that tariffs-driven inflation poses one of the most substantial threats to financial markets in 2025. He also pointed out the unprecedented concentration in U.S. equities among large-cap tech firms as a primary concern.
Tangen's remarks came in response to discussions on potential economic challenges. He noted that many proposals emerging from the United States could exacerbate inflationary pressures. These include increased tariffs and reduced labor supply, which contribute to inflation trends, making it uncertain if inflation will decline soon.
"I don't think I should give any advice to the U.S., but if you look at the risk to financial markets, I think inflation is for sure one, all driven by tariffs."
Nicolai Tangen, CEO of Norges Bank Investment Management
In addition to inflation, Tangen flagged several other risks that could adversely affect global markets. He emphasized that interest rates remaining higher for longer periods could destabilize economies. Furthermore, he expressed deep concerns about high levels of government debt and geopolitical tensions, citing them as critical threats to market stability.
The concentration in U.S. equities among large-cap technology firms has reached unprecedented levels, according to Tangen. This concentration poses a significant risk, potentially amplifying market volatility and influencing global financial dynamics. The implications of such concentration could ripple through various sectors, altering investment landscapes and economic forecasts.
"Many of the suggestions now coming out of the U.S. are potentially inflationary. They could cause more inflation. There could be less labor supply, there could be more tariffs — all of these things are driving inflation, and so it's not a given that inflation will come down."
Nicolai Tangen, CEO of Norges Bank Investment Management
Tangen's insights were delivered on a Tuesday in 2025 during an interview with CNBC at the Davos forum. His observations reflect growing apprehensions about how intertwined economic policies and market trends can impact global financial health. As the leader of a prominent financial institution, his perspective underscores the importance of navigating these risks with strategic foresight.