China Stocks Are Bright Spot in $21 Billion Loss by World's Largest Sovereign Fund

What’s new: Norway’s sovereign wealth fund, the largest in the world, reported a 188 billion Norwegian krone ($21 billion) loss in the first half of the year, or a negative return of 3.4%, citing “major fluctuations in the equity market,” while its equity investments in China made positive contributions.

Why the loss: The loss was dramatic because equity investments, which made up nearly 70% of Norway’s Government Pension Fund Global, fell in value by 6.8% at the end of the first half of 2020, according to Norges Bank Investment Management which manages the fund. The company said that the period saw big swings in the market.

However, the fund’s investments in the Chinese stock market returned 7.7% growth as of the end of June. China accounted for 5.2% of the fund’s equity investments, up from 4.3% at the end of December.

What else you ought to know: Chinese internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. were the seventh and ninth largest equity holdings of the fund respectively at the end of June.

What’s the outlook: “The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” said Trond Grande, deputy CEO of Norges Bank Investment Management. “Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty.”

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact editor Marcus Ryder (marcusryder@caixin.com)

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