Norway oil fund chief warns market exuberance cannot ‘go on forever’


The head of the world’s largest sovereign wealth fund has warned that market exuberance seen in the rise of blank-cheque vehicles and amateur traders cannot “go on forever”.

Nicolai Tangen, head of the $1.3tn Norwegian oil fund, told the Financial Times that “I’m always worried — that’s my middle name” when asked if he was concerned about the possibility of a stock market bubble.

Regarding the sudden surge in stocks such as GameStop and Nokia due to day traders sharing tips on Reddit, he said: “The positive developments we have seen in markets can’t, of course, go on forever. What we are seeing now is indicative of the type of risk appetite there is. And the risk appetite is high. You see it through this type of situation such as Spacs [special purpose acquisition companies] and retail investors.”

Norway’s oil fund on average owns 1.5 per cent of every listed stock in the world, making it one of the most influential investors globally.

Mr Tangen, who took over as chief executive of the manager of the fund in September, said the recent market rally had largely been caused by stimulus measures by central banks and governments.

Trond Grande, deputy chief executive of the fund, told the FT in August that he was concerned about the disconnect between a strong rally in financial markets and a more sluggish recovery in global economies.

Mr Tangen, a former hedge fund manager, has pledged to try to make the Norwegian fund keep outperforming its benchmark, leading some academics to worry it could try to become a more active investor.

The fund said on Thursday it had achieved a 10.9 per cent return last year, largely in the final quarter of the year. Its performance was boosted by technology stocks, which returned 42 per cent in 2020 and now make up more than a quarter of the fund’s equity holdings. Its return was 0.27 percentage points higher than its benchmark, in line with the historical average.

Mr Tangen said as a fund “close to the index”, which has relatively little ability to have a different weighting to its benchmark set by the Norwegian government, there was little it could do about its exposure to the tech sector.

He added that companies such as Apple, Amazon, and Tesla had “grown big for a reason” in 2020 but said it would be “interesting to see how much of the technology leap is done” in terms of a breakthrough last year for technologies such as video conferencing.

The fund’s worst-performing big market last year — the only country it highlighted in which it lost money — was the UK, where it had a negative return of NKr70bn ($8bn) compared with a positive return of more than NKr500bn for the US. Mr Tangen put the UK loss down to the country’s “particular political situation”, which had hurt some companies.


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