Net profit of 1 trillion in the first half of the year! Norway's Top3 holdings are Microsoft, Apple, NVIDIA

On August 14th, the world's largest sovereign wealth fund, the Norwegian Sovereign Wealth Fund, released an eye-catching "performance report" for the first half of 2024.

The fund achieved an investment return rate of 8.6% in the first half of the year, equivalent to earning NOK 147.8 billion (approximately USD 13.79 billion or RMB 1 trillion). Due to its consistently impressive investment returns, the Norwegian Sovereign Wealth Fund has been dubbed the "Stock God" by investors.

As of the end of June, the fund's total assets were USD 1.667 trillion. With a population of 5.475 million, Norwegians have an average of USD 304,000 (approximately RMB 2.176 million) per capita.

The Norwegian Sovereign Wealth Fund was established in the 1990s and as of the end of June, it held shares in over 8,800 companies globally. The fund's size exceeds NOK 18 trillion (approximately USD 1.7 trillion), equivalent to around RMB 12 trillion, with 72% of the funds invested in stocks and 26.1% in fixed income.

In the first half of the year, the Norwegian Sovereign Wealth Fund's stock investment return rate was 12.5% (while fixed income was -0.6%), mainly driven by the strong performance of tech stocks. The fund's top three holdings, Microsoft, Apple, and NVIDIA, all saw significant growth. In the first half of the year, the fund also increased its holdings in Exxon Mobil, Shell, and BP, three major energy stocks, and slightly reduced its holdings in Meta, Novo Nordisk, ASML, Tesla, and Volkswagen.

The top twenty holdings are as follows, with holdings valued at over USD 10 billion: Microsoft, Apple, NVIDIA, Alphabet, Amazon, Meta, Taiwan Semiconductor, Novo Nordisk, ASML. Tesla ranks 20th with a holding value of USD 5.97 billion.

The real-time market value change on the fund's website is approximately NOK 18.17 trillion (approximately USD 1.7 trillion):

Strong Stock Investment Returns

The Norwegian Sovereign Wealth Fund stated that the return rate of its stock investment portfolio in the first half of this year was 12.5%. The fund's CEO, Nicolai Tangen, stated on Wednesday that the stock investments brought very strong returns in the first half of this year. Tangen pointed out: "The result was mainly driven by the demand for new artificial intelligence solutions in the tech sector."

In the first half of this year, the fund reduced its holdings in Meta Platforms (META.US), Novo Nordisk (NVO.US), and ASML (ASML.US), although these three companies are all among its top ten holdings. The fund also increased its holdings in three major energy stocks - Exxon Mobil (XOM.US), Shell (SHEL.US), and BP (BP.US), while reducing its holdings in Tesla (TSLA.US) and Volkswagen The fund reduced its stake in Meta from 1.22% at the end of 2023 to 1.18% by mid-year, with a value of approximately $15.1 billion. As of mid-year this year, the fund held a 1.75% stake in Novo, down from 1.87% at the beginning of the year. During the same period, the fund's stake in ASML decreased from 2.61% to 2.54%.

The fund's performance is highly dependent on the performance of tech stocks, with 26% of the fund's stock investments in tech stocks, up from 21% in the same period last year. Among the top ten stocks held by the fund, nine are tech companies, including Microsoft (MSFT.US), Apple (AAPL.US), and NVIDIA (NVDA.US). Tangen stated that these companies are vulnerable because their growth depends on each other. For example, Taiwan Semiconductor (TSM.US) provides chip development and manufacturing for NVIDIA, while Microsoft and Amazon (AMZN.US) use these chips to develop their own AI products.

To reduce risk, the fund reduced its holdings in tech companies last year to below the level specified by the fund's benchmark index, but Tangen stated that there are no further plans to reduce holdings. Tangen said, "We have slightly reduced our investments in large tech companies, but we have not made any significant bets in this area."

After a rise in the first half of the year, global stock markets have started to decline in recent weeks and are currently in a tense state. The prospect of a Fed rate cut, as well as lackluster performance from tech giants like Amazon, Microsoft, and Alphabet (GOOGL.US), have exacerbated market volatility. Looking ahead, Tangen stated at a press conference that the stock market is not expected to rise as it has in previous years. According to reports, Tangen mentioned that many uncertainties and "completely different geopolitical situations" mean that global stock markets are now facing more risks.

However, Tangen downplayed the impact of the November U.S. presidential election on the market. Tangen said, "Overall, we believe that regardless of who wins the election, the large U.S. companies we invest in will continue to perform well. You would be surprised to find out how little we consider the U.S. election, because we invest in U.S. companies, and in our view, both parties are pro-business."

Fixed Income and Real Estate Investment Portfolio Marginal Loss, Warning of Sovereign Debt Risk

Meanwhile, its fixed income and unlisted real estate investment portfolios experienced marginal losses - fixed income investments decreased by about 1%, and the value of unlisted real estate assets also decreased by about 1%, influenced by an increase in vacancies in U.S. office positions and high policy rates. The fund stated that the proportion of short-term bonds held by the fund is higher than the benchmark index, which has made a positive contribution to relative performance.

Furthermore, the fund's report stated that in the first half of this year, the return rate of its unlisted renewable energy infrastructure investment portfolio was -17.7%. The company mentioned that the increase in capital costs had a negative impact on the investment value during the period from January to June It is worth noting that Tangen stated that one of the risks facing the financial markets comes from the global sovereign debt levels. Tangen said that countries around the world have not done enough to reduce debt, which poses a risk to the stability of already uncertain financial markets. Tangen said: "What worries us is the level of debt we see in many countries, with budget deficits persisting and continuing to increase."

Tangen refused to point out any specific countries facing risks, but he noted that this issue affects "most countries and many major powers," and will make financial markets "less robust." Tangen said: "We are very concerned because it has reached levels we have never seen before, it continues to increase, and there seems to be little willingness anywhere in the world to actively reduce it."

Tangen said that while he does not expect a collapse, a crisis could occur suddenly. He cited the market turmoil caused by the economic policies of Liz Truss during her brief tenure as UK Prime Minister in 2022, saying: "You will see what happens if there is a Truss moment, like we saw in the UK, where people suddenly lose confidence, which may be the biggest risk we face today."