Norges Bank, Norway’s central bank, right now is looking at a mind-boggling loss of 1.215 trillion krone. That’s approximately just under $40 billion in Q1 2023 alone. As of the end of March, the fund’s total value stood at 18.53 trillion kroner. This decrease was primarily due to the negative impact from currency exchange rates and a drop in equity investment returns.
The fund currently invests about 70% of its investments in equities. It did, for example, post a 1.6% loss overall in this industry in that quarter. The fund’s dollar-denominated market value fell more dramatically than the krone appreciated against other major currencies.
As Nicolai Tangen, the CEO of Norges Bank, the fund’s manager, noted the difficulties experienced by the fund in this time. He remarked that market volatility had a huge effect on equity investments, especially within the technology sector, which propelled returns overall to be negative.
“The quarter has been impacted by significant market fluctuations. Our equity investments had a negative return, largely driven by the tech sector,” – Nicolai Tangen
Adding fuel to those fires, the strengthening krone made the construction boom more expensive. Consequently, the market value of the fund fell by some 879 billion kroner. Those currency movements put even more pressure on the fund’s negative performance. At the same time, this illustrates how powerful macroeconomic factors can heavily influence investment returns.
Norges Bank’s recent performance is emblematic of what’s been happening in markets globally and especially with the wild swings in technology shares. Investors are trying to make sense of this stormy sea. In the meantime, the fund’s management team continues to remain watchful, regularly evaluating market conditions and modifying investment strategies accordingly.