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Norwegian oilfund to limit European exposure but to double in emerging Asia

Friday, March 30, 2012
The Norwegian wealth fund or oil fund's exposure to European markets will be reduced from over 50 to 40 percent according to the Norwegian the government's white paper on the Fund's management, which will was presented on Friday by Finance Minister Sigbjørn Johnsen.

Already last year, Sigbjørn Johnsen said that its geographical distribution would change over time in favor of emerging markets, according to the Norwegian business daily, Dagens Næringslive.

"This change has begun," said a statement from the ministry. From the current 50 percent of the fund's exposure to European equities and bonds is reduced to 40 percent, clarify the Treasury, without giving any time frame.

“It can not be excluded that we have to sell assets in Europe,” says Johnsen during the press conference.
In general, however, the increased allocation to other regions, financed by the Fund's ongoing growth will be realised.

“The proportion invested in Europe should be reduced gradually over time. At the same time the fund will grow so that investment measured in Krona / dollars or monetary terms will still increase over time. The fund will remain a significant investor in Europe,” says Johnson of the message.

In detail, the proportion of the fund that will be invested in Europe is reduced from 54 to 41 percent. The percentage in the Americas and Africa will increase from 35 to 40 percent, while in Asia and Oceania it will increased from 11 percent to around 19 percent. In all, this means that the proportion invested in emerging markets will go from six to ten percent of the fund.

“It is important that the Fund reflects the power relations in the world economy,” says Johnsen.

New criteria for stocks and bonds was also proposed  where by it was proposed that the Fund shall also henceforth divide their equity investments in relation to the size of the different markets around the world, that is according to the so-called "market weights".

"The market weights will mean that a larger proportion of the capital invested in emerging stock markets will increase than it is today. As the world economic and financial center of gravity changes, it will be reflected in the fund's investments, "it says.
By Team

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