Norway's sovereign wealth fund liquidation reports spark panic

News reports that Norway’s sovereign wealth fund (SWF) is planning to liquidate its holdings to make up for the shortfall in government revenues because of the oil price slump sparked panic among domestic investors. 

The oil-rich country operates the world’s largest SWF, with assets of nearly $1 trillion. With oil prices dropping more than 60 per cent this year, the country is undergoing one of its worst economic slowdowns, prompting it to withdraw from the fund, said a Bloomberg report. 

Norway’s Government Pension Fund Global is a big investor in the Indian markets with assets of nearly $10 billion. According to an annual disclosure made by the fund last month, India accounts for 1.2 per cent of the fund’s total equity exposure. The fund has shareholding in several blue chip names like Reliance Industries, HDFC, Infosys and Tata Consultancy Services (TCS). 

Besides, it has holdings worth over $2 billion in the domestic debt and real estate. Vinod Nair, Head of Research at Geojit Financial Services said if such a big fund has to liquidate, it will be a concern not just for India but also the global markets. Market experts say the decline in the oil price poses a big risk to global equities as funds operated by oil-rich countries are big investors worldwide.